Working Papers

Global Value Chains – analysis of wine in South Africa

Global Value Chains – analysis of wine in South Africa

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18 Oct 2017

2 minute read

Author(s): Taku Fundira

Today’s global economy has witnessed changes in the way production and trade occur. As new technologies are developed, globalisation and regionalisation are taking centre-stage, and we are witnessing a gradual integration of economies into regional value chains (RVCs) and global value chains (GVCs). Participation in GVCs exposes firms to new technologies and know-how that might otherwise be unavailable, as well as to new sources of capital. It enables suppliers to meet product standards and technical regulations that permit access to a greater variety of markets. At an economy-wide level, GVC participation tends to lead to job creation even if it depends significantly on imported content in exports.

For farmers, participation in GVCs can facilitate the creation of agribusinesses for increased value addition in exported goods. Their participation will enable them to harness the interdependence among the different actors in the value chain, namely the suppliers of inputs – the farmers; the businesses providing technical support for the farmers such as agricultural machinery – the financiers; the wholesale producers of farm products; the processors; and associated sellers. Consequently, participation in GVCs will facilitate farmers’ access to inputs, financing, and end-markets at the local, national, regional, and international levels, thereby enabling them to have a greater voice in the value chain and enhancing their economic returns.

This Working Paper focuses on the wine industry in South Africa, highlighting the ‘big picture’ trade profile as well as key strategies that the wine industry is implementing to promote domestic, regional and global value addition. Specifically, it aims to address four issues: i) sector specificity of value chains and their impact on economic development; ii) the promotion of regional value chains as an alternative to global value chains; iii) the role of world cities as conduits for promoting value addition and the corporate services that they provide; and iv) issues of sustainability that value chains can affect (such as environmental and social side-effects).


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