Value Chains and Trade Policy

Summaries Value?chain and traditional trade policy analysis are complementary: each throws light on areas overlooked by the other. Value?chain analysis helps to identify who gains from market imperfections and how the distribution of gains can be altered. Trade policy analysis highlights the extent to which value?chain dynamics are influenced by market rents. The article uses the examples of sugar and horticulture to illustrate the potential gains from combining the two methodologies. It demonstrates that in markets that combine heavy trade protection against some suppliers with preferences for others there exists a relationship of mutual dependency between the elements of the value chain. The implications of this for the distribution of value merit further investigation.