at first glance many of the products we use every day appear simple but have you pondered the intricate details hard work time and skill involved in their design production and delivery to you social scientists employ the concept of the value chain to describe this process take bicycles for example producing these historically took place within the boundaries of one firm in one location as firms expanded to serve different distant markets they still produced the whole product themselves what's known as the era of trade in final goods then we entered an era of trade in intermediate Goods where new technologies made it possible to fragment production and now there are multiple establishments each specializing in the production of the individual by components this chain includes all steps from research conception and design to production sales and aftercare [Music] it is a process which spans multiple firms and places worldwide giving rise to what we refer to as Global value chains [Music] creation of bicycles involves a collaborative effort among various countries and regions each contributing their unique set of skills to bring these products to the global market brakes are predominantly produced in Japan while frames mainly come from China and Vietnam with Italy producing many saddles Finn's wanting to enter the global market for bicycles don't need to learn how to produce the entire bike rather with global value chains they can start with one component or a specific task that is similar to what they are already good at doing locally then by harnessing local resources they can move into more sophisticated activities in the chain this is the process of moving up the smile also known as upgrading the multinational Enterprise Shimano is an example of this the company began producing freewheels in Sakai City this was in part due to the area's Regional advantage in heavy industry the company then upgraded horizontally into production of other parts such as speed Changers before upgrading vertically into new research and development activities the firm is still generating new jobs in the same regions over 100 years on all these changes the way in which countries regions cities think about Economic Development strategies they need to understand where they are in global value chains and adopt strategies for upgrading in global value chains of course with all the potential benefits of global value chains there are some potential unintended consequences public policy makers need to consider how to make sure these Global value chains in their regions don't just extract value but also provide value and make sure that that value is diffused to the local actors looking into the future with increasing geopolitical fragmentation climate related shocks our economies need to think about new tools and strategies in order to balance opportunities and threats from the new global environment so next time you ride your bicycle take a moment to appreciate the incredible Global collaboration that makes it possible