Beyond regulation? Opacity in global value chains

Global value chains (GVCs) involve a plethora of material and non-material flows, transactions, and processes across national borders. GVCs are typically portrayed as representing linear sequences of activities by various economic actors at different points, starting with raw resource suppliers and ending with finished product suppliers catering to consumers worldwide. Value is added along the chain, with the highest profits realised at the final stage, where production is completed and commercialisation begins. Yet, this image of GVCs reflects a reductionist and oversimplified view of economic processes that are inherently much more complex since many flows and transactions along GVCs lack transparency, with numerous economic activities and commercial exchanges occurring in the “shadows”. Opacity as a central feature of GVCs thus must be accounted for. The question to be addressed in this paper is whether opacity in GVCs is due to weak or lacking regulation by national and international authorities or whether, in fact, there is regulation, which, however, is geared toward (inadvertently) maintaining, not reducing, extant levels of opacity in GVCs. We examine both licit and illicit GVCs (cocaine and gold) to illustrate our analysis.