Global Value Chains and the Information Asymmetry Problem, An Overarching Challenge of Sustainable Economic Governance

Silvia Ciacchi (Erasmus University Rotterdam)


The regulation of Global Value Chains (GVC) and their impact on social and environmental outcomes is one of the most difficult challenges for modern-day lawmakers. In the past few decades, this topic has been the subject of much academic and political discourse. Most recently, policymakers and regulators have been developing new legal and institutional designs aimed at providing systemic solutions to the pervasive harms linked to complex, transnationally disaggregated networks of economic activities embedded into the fabric of today’s economy. This paper seeks to shed light on a persistent overarching issue of GVC regulation for sustainability. Namely, the information asymmetry problem. Misaligned incentives and operational complexity enable information loss between the different tiers of a GVC. The overarching information problem affects both the private and public governance of global value chains. This paper seeks to explore the information asymmetry problem and how it relates to GVCs and sustainability. In particular, it seeks to advise on how regulators should approach regulatory intervention in this area with the aim of maximising disclosure incentives along the whole chain and closing the information gaps.

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