UNITED NATIONS, Jul 21 2026 (IPS) - Despite rising geopolitical tensions, trade restrictions and calls to bring production back to domestic shores, the global economy remains more interconnected than it may appear. Trade through global value chains (GVCs) reached historic levels in 2024, according to a new report from the Organisation for Economic Co-operation and Development (OECD).
GVCs, the cross-border production networks through which countries exchange materials, services and intermediate inputs used to produce goods and services, accounted for roughly 17 percent of global GDP in real terms between 2022 and 2024. This is up from approximately 16 percent before the 2008 Global Financial Crisis.
The findings stand to challenge expectations that the COVID-19 pandemic and geopolitical tensions would have on the campaign of de-globalization. GVC trade expanded rapidly before the Global Financial Crisis and later stabilized at historically high levels. Nevertheless, in 2024 inflation-adjusted GVC trade remained close to its 2022 peak, even as total global trade declined slightly from its 2022 level.
The distinction between real and nominal figures is particularly important following years of elevated inflation and volatile commodity prices. Rising prices can inflate the apparent value of international trade without representing an actual increase in the volume of goods and services exchanged. The OECD’s inflation-adjusted figures indicate that cross-border production itself has remained historically high.
Beneath that overall stability, however, industries have moved in markedly different directions. Manufacturing and transportation remain among the sectors most dependent on internationally sourced inputs.
Coke – a carbon-rich fuel produced from coal and primarily used in steelmaking – refined petroleum products, water and air transport, information and communication technology, electronics, rubber, plastics, chemicals, basic metals and motor vehicles all recorded GVC trade exceeding 35 percent of their gross output in 2024, indicating their heavy reliance on cross-border production networks.
While gains were recorded in those sectors, the motor vehicle industry became less internationally integrated over the period examined, falling from the sixth-most internationalized sector in 2011 to tenth in 2024, being overtaken by chemicals, air transport and electronic equipment.
Pharmaceuticals moved in the opposite direction. Despite increased policy attention toward strengthening domestic medical supply chains following the COVID-19 pandemic, pharmaceutical production became more dependent on internationally sourced inputs between 2011 and 2024.
GVC participation also increased notably in air transport and warehousing, highlighting the continued importance of globally connected logistics networks in supporting production.
The differences illustrate the uneven nature of supply-chain reconfiguration: while some industries have reduced their reliance on foreign inputs, others have become increasingly integrated into cross-border production networks.
The same pattern is visible across national economies. Of the 80 economies examined by the OECD, 49 had a higher share of foreign value added embedded in their exports in 2024 than in 2011.
Across the economies examined, countries generally relied more heavily on foreign inputs to produce their exports than they contributed inputs to exports produced elsewhere. For example, a country importing foreign-made components to manufacture and export a car is participating backward in a GVC. A country supplying steel that is then used to manufacture and export that car elsewhere is participating forward.
These patterns vary depending on the structure of each economy. Large economies such as the United States, China and Brazil are generally less reliant on foreign inputs because more of their production can be sourced domestically. Major commodity exporters such as Norway and Kazakhstan, meanwhile, rank highly in forward participation because their domestically-produced energy and raw materials become inputs in production and exports elsewhere.
Yet, increased GVC participation does not necessarily mean companies are simply buying more supplies from abroad.
Between 2019 and 2024, China, Japan, the United States and the European Union all became more reliant on foreign value in their exports. However, the OECD found that this was not primarily because companies shifted toward foreign suppliers. Instead, these economies increasingly produced and exported goods and services that themselves relied more heavily on international supply chains.
For example, an economy could begin sourcing more car parts domestically but simultaneously increase its exports of cars, which depend heavily on globally connected production networks. Its individual supply chains may become more domestic, while its overall economy becomes more integrated into global production.
The findings suggest that efforts to bring parts of production closer to home can therefore occur alongside deeper global economic integration.
Trade flows – the movement of goods and services across borders – only captures part of that interconnectedness. Multinational companies (MNCs) also operate and produce directly in foreign markets through foreign affiliates — companies they own or control outside their home country.
If a German MNC owns a factory in the United States, that American operation is a foreign affiliate. Products it manufactures and sells within the United States would not count as international trade, as they never crossed a border, yet the factory remains part of the German company’s global production network.
In 2023, foreign affiliates generated approximately USD 25.6 trillion in output, equivalent to one-quarter of global GDP and only slightly below the USD 26.6 trillion value of total world trade in goods and cross-border services.Together, MNCs and their foreign affiliates accounted for roughly 35 percent of world gross output in 2023 but only 60 percent of world exports, demonstrating their outsized role in international trade.
The geography of MNC production is also gradually broadening. While companies headquartered in OECD economies still controlled nearly 85 percent of foreign-affiliate output in 2023, the share of production involving non-OECD companies operating in non-OECD markets, nearly doubled from 4.9 percent in 2011 to 9.3 percent.
The report’s findings suggest that globalization is not simply retreating in the face of geopolitical fragmentation, rather global production is being reorganized across industries, companies and countries. Supply chains may be shifting, diversifying and adapting to new risks, but the networks connecting the global economy remain deeply entrenched and central to the production of goods and services.
IPS UN Bureau Report
