ILO Guide for Value Chain Analysis and Upgrading

This Guide for Value Chain Analysis and Upgrading is written for the ILO enterprise specialists and the consultants who work in developing countries and are engaged in upgrading projects. It is also written for the ILO constituents, such as worker and employer organisations and government agencies. The purpose of the guide is to look at how to practically carry out value chain analysis, find upgrading solutions and implement them, using an ILO approach towards upgrading.

Instructional material | 01 January 2006

Every enterprise is positioned in a value chain. A value chain is the full range of activities that are required to bring a product or service from its conception to the final consumers. This includes activities such as design, production, marketing, distribution and support services to the final consumer. Value chains can be restricted to local markets, but do also expand globally. This is just as true for small and medium-sized enterprises in developing countries as it is for enterprises in Europe and North America.

The Value Chain Analysis is a conceptual framework for mapping and categorising economic processes. It helps to understand how and where enterprises are positioned in economic processes. It also helps to identify new business opportunities and possible leverage points for upgrading solutions.

Upgrading means increasing the economic competitiveness of enterprises, occupying new positions in a global value chain or delivering to new markets and buyers. Good working conditions, job and employment security, a clean environment, a well-educated youth, etc, are important means by which to upgrade. Such approach goes in line with the International Labour Organisation’s position that socially sustainable growth is strengthened by promotion of Decent Work.

The structure of the guide is divided into two sections: The first part gives an example for the value chain approach towards upgrading, as well as explanations for basic concepts. The second part is all about putting theory into practice: it is divided into five modules that outline a kind of project approach with real outcomes at every stage.