What Is a Commodity Chain?

  • Commodity chains involve labor and production processes that result in a finished product.
  • Power dynamics and profit distribution within commodity chains can reveal exploitation and inequality.
  • Innovation and upgrading to more profitable nodes are crucial for a country’s success within the global economy.

Commodity chain is a term that describes a network of labor and production processes involved in creating a finished commodity. It was introduced by Hopkins & Wallerstein and initially focused on the global economy. However, it can also be used to study local economies. 

The concept allows us to see the social, economic, and political relationships among different actors involved in production and distribution, including how power dynamics can dictate terms in favor of some. It has gained a lot of attention since the mid-1990s and has become a multidisciplinary field of study.

Fast fashion, coffee chains, and automobile production are all examples of a commodity chain, each involving different actors and stages of production. These examples show how commodity chains can promote exploitation, harm the environment, and shape cultural identities. The automobile industry is an example of a producer-driven commodity chain, while the coffee industry involves growers, exporters, roasters, and retailers.

Is Commodity Chain Unjust In The Global Economy?

Commodity chains are a useful tool for analyzing power dynamics and profit distribution within the global economy. Hopkins & Wallerstein traced the production of ships and wheat across the globe and identified nodes controlled by certain actors, showing the uneven distribution of wealth. 

Gereffi expanded on this, arguing that a country’s economic success is determined by its association with profitable nodes in the global economy. Competition and innovation play a key role in increasing profits, and a country’s ability to upgrade its industrial activities into more profitable nodes is crucial for its developmental success.

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