Value chains: An economist's perspective

This article starts by reviewing what economists can learn from work on val ue chains by other social scientists, and then considers what economics may have to offer both in understanding value chains and in designing policies related to them. In terms of economic accounting, the article reviews the connections between value chains and input-output tables, between the well- being of firms and of people, and between real wages and money wages. In te rms of economic causation, it explores the relevance to value-chain analysi s of two theories of comparative advantage. It also asks about the circumst ances in which government intervention to upgrade firms would benefit a cou ntry's unskilled workers or could be justified on economic grounds.