2020/12 LEM Working Paper Series

The Power of Sectoral Geographical Centrality in Global Production

Panagiotis Iliopoulos, Giorgos Galanis, Ashok Kumar and Lilit Popoyan
Global value chains, positionality, power relations, network theory.

  JEL Classifications
C67, D57, D85, L11
Power is a key component in understanding and analyzing global production and the governance structures of Global Value Chains. In this paper, we propose a novel analytical link between the power dynamics in GVCs and the network configuration of their respective production topology. Our proposed link is based on the notion of positional power according to which power is associated with the centrality of a sector with regards to the production process, the sector belongs to. Using global input-output data, we show that the network structure of global production is associated with the global distribution of profits among national economic sectors and, consequently, influences the power relations and thus the governance structures of supply networks. More specifically, we find a high correlation between the distribution of profits and a sector’s position in global production, captured by its total strength centrality. Based on this, we provide a quantitative measure of positional power within global production and its governance structures.
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