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Commodity Chains
Background and definition
The concept of commodity chains was introduced by Terence Hopkins and Immanuel Wallerstein in an analysis of trade and capital flows in the global economy prior to 1800, defining it as a ―a network of labour and production processes whose end result is a finished commodity (Hopkins and Wallerstein 1986: 159). Since then different methodologies have been developed to analyse commodity chains.
Value Chain Analysis
A value chain describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Value Chain Analysis is used to identify which activities are best undertaken by a business and which are best provided by others, or outsourced. The value chain describes the full range of activities required to bring a product or service from its conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use. Production per se is only one of a number of value-added links. There are ranges of activities within each link of the chain. Although often depicted as a vertical chain, intra-chain linkages are most often of a two-way nature – for example, specialized design agencies not only influence the nature of the production process and marketing, but are in turn influenced by the constraints in downstream links in the chain (Tallec and Bockl, 2005).
Global Commodity Chain (GCC) Analysis
The primary focus of the Global Commodity Chain (GCC) is analysis of the international trading system and the increasing economic integration of international production and marketing chains. Introduced by Gereffi during the mid-1990s, the GCC concept was developed within an analytic framework of the political economy of development and underdevelopment, originally derived from world systems‘ theory and dependency theory. It was developed primarily to analyze the impact of globalization on industrial commodity chains.
GCC highlights power relations, which are embedded in value chain analyses. It has shown that many chains are characterized by a dominant party (or sometimes parties) that determine the overall character of the chain, and as lead firms become responsible for upgrading activities within individual links and coordinating interaction between the links. Here there is a distinction between two types of governance: those cases where the coordination is undertaken by buyers (buyer-driven commodity chains‘) and, those in which producers play the key role (producer-driven commodity chains‘) (Tallec and Bockl, 2005). The relatively capital-intensive manufacture of automobiles, aircraft and electrical machinery can be thought of as examples of producer-driven commodity chains.
Filière analysis (translated as Commodity Chain Analysis, CCA) was developed by researchers at the Institute National de la Recherche Agronomique (INRA)‘ and the Centre de Coopération Internationale en Recherche Agronomique pour le Développement (CIRAD)‘ (Raikes et al, 2000). It is applied to the analysis of existing marketing chains for primarily agricultural commodities, assessing how public policies, investments and institutions affect local production systems (Tallec and Bockl, 2005 and Raikes at al, 2000).
Filière analysts have borrowed from different theories and methodologies, including systems analysis, industrial organization, institutional economics (old and new), management science and Marxist economics, as well as various accounting techniques with their roots in neo-classical welfare analysis (Kydd et al., 1996: 23). An empirical research tradition has been dominant from the beginning. The main objective of filière analysis has been to map out actual commodity flows and to identify agents and activities within a filière, which is viewed as a physical flow-chart of commodities and transformations. The quantitative tradition of filière analysis has mainly attempted to measure inputs and outputs, prices and value-added along a commodity chain. In addition there exists the anthropological tradition within filière work. This focuses on markets and power in a real world‘ sense. From this point of view, it relates to the GCC approach.