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Jann Lay

German Institute for Global and Area Studies (GIGA)

Jann Lay is Head of the Research Programme “Growth and Development” at the GIGA German Institute for Global and Area Studies, Hamburg (www.giga-hamburg.de). As adjunct professor, he also teaches development economics at the University of Goettingen. His work is on various facets of economic development in the Global South, in particular in Africa, including on (informal) employment and labour market, the impacts of commercial agricultural expansion, environment-development linkages, as well as issues related to energy, climate and development (see www.giga-hamburg.de/de/team/lay).
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Sustainable Global Supply Chains Report 2022

Global supply chains affect the economy, the environment and social welfare in many ways. Worldwide, economies are experiencing global supply shortages today, affecting key industries such as automotive and consumer electronics as well as vaccine and medical supplies industries. These preoccupy policymakers, who are debating independent national production capacities and restrictions on international trade, but also large companies, which consider reshoring production and abandoning just-in-time procurement. At the same time, the greening of the global economy requires a restructuring of global production to massively decrease its environmental footprint. This creates new supply chain challenges – how to move towards circular economies and how to reorient energy-intensive industries towards renewables and green hydrogen, for example. And let‘s not forget: Consumers are increasingly demanding higher social and environmental standards. Transparency requirements and binding due diligence obligations will in particular affect countries that export raw materials and labour-intensive goods produced under problematic environmental and social conditions. All of this calls for policies that shape global supply chains in accordance with globally agreed social and environmental objectives. Policies along these lines will have to balance the legitimate interests of different countries and they may easily fail to achieve their objectives unless they are firmly grounded in a thorough understanding of the respective structures in supply chains, including the power relations between the actors. Further, the economic, social and environmental effects of alternative policy options need to be well understood. Science can make an important contribution here, especially if it maintains a constant dialogue with politics and society. This is why the international “Research Network Sustainable Global Supply Chains” was initiated by the Federal Ministry for Economic Cooperation and Development (BMZ). It currently comprises about 100 internationally leading scientists from all over the world and is jointly coordinated by our four institutes. Its tasks are: To conduct and stimulate research that contributes to making supply chains more sustainable; and to collect and synthesize the best international research on this topic and make it accessible to policy makers and other societal actors. In addition to its own research, the network organises academic conferences and discussions with policymakers, organises a blog and produces podcasts. With this report – the first in a new annual series – we present new research highlights, provide a forum to debate controversial supply chain topics and identify policy-relevant research gaps for the network‘s future work. The report is, at the same time, an invitation to participate in the discussions on how investment, production and trade will be reorganized in a global economy that has to respond to geopolitical challenges.

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Multilateral coordination and exchange for sustainable global value chains

While participation in global value chains (GVCs) is widely associated with benefits for countries’ development and growth, its environmental and social costs become increasingly evident. Representing core buyer and supplier countries in GVCs, the G20 is particularly suited to tackle this global challenge. We recommend the G20 should become a key global forum for exchange and collaboration on this important challenge, setting in place effective processes to ensure multilateral coordination for sustainable GVCs in the G20 and beyond.

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Fostering Inclusive and Sustainable Global Value Chains: The Role of the G20
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Carbon emissions from the global land rush and potential mitigation

Global drivers and carbon emissions associated with large-scale land transactions have been poorly investigated. Here we examine major factors behind such transactions (income, agricultural productivity, availability of arable land and water scarcity) and estimate potential carbon emissions under different levels of deforestation. We find that clearing lands transacted between 2000 and 2016 (36.7 Mha) could have emitted ~2.26 GtC, but constraining land clearing to historical deforestation rates would reduce emissions related to large-scale land transactions to ~0.81 GtC.

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Promoting private investment to create jobs: A review of the evidence

The promotion of private investment, in particular in the form of Foreign Direct Investment (FDI), has been a key component of economic development strategies since the early 1990s. Recent development policy initiatives, for example the G20 Compact with Africa (CwA) but also Germany's "Marshall Plan with Africa", put re-renewed emphasis on mobilizing foreign private capital for accelerated economic growth and, most importantly, the creation of productive employment at scale. This emphasis rests on two important assumptions: First, it assumes that FDI is conducive to economic development through technology transfer, increased productivity and additional jobs - at least when it comes as greenfield investment. Second, it assumes that government policies can be successful in attracting FDI to achieve those benefits. Both developed and developing countries have "redcarpet policies" in place, which - in developing countries - are often supported by bilateral donors and multilateral institutions: governments provide special tax treatment and subsidies to foreign investors, have established special economic zones and investment promotion agencies, seek to mobilize private finance through blending, and improve the investment climate, for example by negotiating investment treaties. The present study reviews the empirical evidence that puts to test these two assumptions. After presenting a conceptual framework we systematically review the vast empirical literature on the ramifications of FDI in developing host countries with a focus on employment effects. This part of the study is followed by an assessment of the empirical evidence on the impact of different investment promotion instruments on FDI inflows and subsequent development outcomes, again emphasizing employment outcomes. As the review will show, direct estimates of the cost-effectiveness of FDI promotion policies are scarce. Yet, taken together, the two parts of this study allow for insights as to whether the effects on FDI flows and the subsequent development, in particular employment, effects are quantitatively large enough to justify the costly efforts of governments to attract FDI. In a last part, we therefore discuss the policy implications of the reviewed evidence.

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Responsible Large-Scale Agricultural Investments in and by G20 Countries: A Call for more Transparency

Many international agricultural land investment projects are criticized because of their disrespect of land tenure rights, the few benefits they provide local populations, and the often displayed negative environmental impacts. The Group of 20 (G20) has recognized the need for more responsible land investments in targeted lower- and middle-income countries, but land deals remain opaque. This policy brief suggests the necessity of mandatory due diligence in global supply chains. As an important, quicker, and more feasible step, the G20 should commit to increasing transparency by (1) supporting transparency initiatives, (2) making contracts publicly available, and (3) encouraging companies to release relevant information. Open data can then be used by relevant stakeholders to hold investors accountable.

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