The renewed attention to food trade can be attributed to recent disruptions in global agri-food supply chains. Therefore, research into the impact of globalization on domestic agri-food systems is of special interest not only to policymakers but also to researchers. In fact, the transformation of agri-food systems serves as a major catalyst for structural change—a crucial process of economic development. In this dissertation, I examine three key aspects of the transformation of agri-food systems in response to participation in global agri-food value chains, hereafter referred to as GVCs. Chapter 1 explores the impact that GVCs have on the distribution of value-added among the various segments of domestic agri-food value chains, as measured by food dollar expenditures. Chapter 2 delves into the effects of participation in GVCs on the distribution of labor income within domestic agri-food value chains, with a particular focus on the decline in farm labor’s share of income as a key feature of the transformation in agri-food systems. Finally, Chapter 3 addresses consumer issues at the downstream end of the value chains, investigating the impact of GVC participation on the long-term pass-through of international food price spikes to domestic consumer markets.The first essay, titled “How Does Participation in Global Value Chains Impact Agri-food Systems Transformation?”, examines the relationship between participation in global value chains and the transformation of agri-food systems, as measured by the contribution of each segment in the value chain to food dollar expenditures. The study analyzes a panel dataset of 61 countries and three distinct types of agri-food value chains, representing 90% of the global economy for the period 2005-2015. The empirical results suggest that higher participation in global agri-food production networks is associated with a decrease in the farm's share of total value-added. More interestingly, this study shows that globalization causes a change in the distribution of value-added among the so-called “hidden middle” industries, such as manufacturing, transportation, and retail. This finding is important as it challenges the conventional wisdom about expanding post-farm industries in the agri-food systems transformation narrative. In the second essay, titled “Global Agri-food Value Chains and Farm Labor's Share of Income”, I study the impact of participation in global agri-food value chains on the farm labor's share of income. Specifically, I examine the distribution of income between farm labor and other agricultural production factors such as capital as well as between farm and post-farm labor. Using nationally representative longitudinal data for the period 2005-2015, I find that the decline in the farm labor’s share of agricultural income is exclusively attributable to stronger backward linkages (connections a country has with its foreign suppliers of agri-food inputs). Conversely, the decline in the farm labor’s share of total labor income within the entire agri-food value chain is more associated with higher forward linkages (connections of a country to its foreign downstream partners). Surprisingly, the empirical results suggest that the effects on farm labor are spilling over from the global food and beverage value chain. This finding contrasts with the prevailing idea that attributes the distributional effects of globalization on farm labor directly to participation in the global agricultural value chain. The third essay, titled “Buffer or Conduit? Global Agri-food Value Chains and Food Price Transmission”, explores how participation in global agri-food value chains affects food price transmission. Using a two-step regression analysis, I first estimate country-specific long-run pass-throughs, which measure the extent to which changes in international food prices lead to changes in domestic consumer food prices. This study estimates the long-run pass-throughs for 173 countries and four episodes of international price spikes between 2000 and 2022. I then examine how participation in GVCs impacts the long-run pass-through estimates. I find that higher two-sided or mixed participation (more intermediate positioning in GVCs) decreases food price transmission, while pure backward and forward GVC related-trade (participation in later and earlier stages of production, respectively) increase the transmission of international food price spikes. This study challenges the dominant view that higher real integration into GVCs transmits global food price spikes to domestic markets. Specifically, trade policies should focus more on promoting intermediate positioning in GVCs to stabilize domestic food prices.
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