The following is a screenshot of a great article by S. Mahmud Sagir, MBA, PMP, which you can (and should) access through the following link.

His article brought to mind an old Procurement Insights post that I retrieved from the archives, which provides a great contextual timeline on the evolution of Global Value Chains, External Economies, and Cluster Development. I share my thoughts below the screenshot.

My Comment

This is such a great article, S. Mahmud Sagir, MBA, PMP, that immediately brought to mind the following post in which I reference E.G. Robinson (1931) and Reem Heakal – https://bit.ly/4nXmpNJ. – Public Sector Procurement Practice and the Principles of External Economies, Clustering and the Global Value Chain (August 28, 2007)

The relationship between these articles is that the first (Procurement Insights) lays the theoretical and policy-oriented groundwork for how external economies, clustering, and GVC principles apply to procurement in both public and private sectors, while the second (Nearshoring Apparel) illustrates how those concepts are practically realized as businesses reconfigure supply chains through nearshoring. Both argue that proximity, collaboration, and networked governance are central to building resilient, innovative, and competitive value chains in today’s global economy.”

So, here is the question: Focusing on the core areas of global value chains and proximity, what do both the 2007 and 2025 articles indicate regarding the progress between the two time periods?

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BONUS COVERAGE

Progress in Global Value Chains and Proximity: 2007 vs. 2025

1. Global Value Chain (GVC) Expansion and Transition

2007 Situation:

• The 2007 article described an era of expanding, increasingly complex global value chains.
• Emphasis was on international fragmentation: production was distributed worldwide, driven by offshoring for lower costs, specialization, and clusters that integrated suppliers from different geographies into single supply chains.
• Proximity was relevant primarily through localized clusters (external economies), but the main trend was toward ever-longer, trans-continental value chains linking low-cost suppliers to global lead firms.

2025 Situation:

• While GVCs are still foundational, the period 2007–2025 saw major shifts:
  • The trade intensity of goods value chains decreased: after rapid globalization up to 2007, the share of output crossing borders dropped from 28.1% in 2007 to about 22.5% in the 2010s, and has not returned to previous highs.
  • GVCs have become less about maximum geographic spread and more about strategic configuration: emerging economies like China increased both participation and internal consumption, which altered patterns of trade and control.
  • Particularly after the global financial crisis (2008) and through shocks such as COVID-19 and trade tensions, GVC expansion slowed, and there was evidence of stalling or even partial retreat from the previous era of fragmentation.

2. The Rise of Proximity, Nearshoring, and Regionalization

2007:

• Proximity was largely discussed conceptually (external economies, clusters).
• Policy centered on local cluster development and the benefits of external network effects for SMEs and regional suppliers, often via public sector initiatives.
• “Mobile external economies” were just emerging, and main value creation was still linked to global, rather than regional or proximate, arrangements.

2025:

• Proximity has become a strategic imperative in many value chains:
  • Nearshoring, reshoring, and regionalization are actively pursued to reduce lead times, increase resilience, and better manage risk against global shocks.
  • Companies have realized measurable benefits: reduced logistics-related emissions (10% for some firms), improved supply stability, and lower last-mile delivery costs.
  • Geopolitical tensions, rising labor/freight costs, and sustainability goals are accelerating the shift toward more regional supply chain structures.
  • There is a trend toward denser regional networks (especially in Asia and North America), but without major deglobalization. Cross-border links are being reconfigured rather than abandoned.
  • Proximity enables greater agility and customer responsiveness, turning local or regional clusters into global competitive advantages.

3. Table: GVCs and Proximity—Change from 2007 to 2025

4. Key Takeaways

• Shift from maximum globalization to strategic proximity: The period saw a move from ever-globalizing value chains to more nuanced, risk-aware, and regionally resilient configurations.
• Proximity is now operationally as important as it was conceptually in 2007: Companies integrate nearshoring and regional clusters as core supply chain strategy, not just policy aspiration.
• GVCs remain globally connected but are now shaped by balancing resilience, customer needs, and cost—rather than lowest cost alone.