Global Agrifood Value Chains, Structural Transformation and Income Inequality

ABSTRACT Global agrifood value chains are rapidly expanding worldwide and play a key role in transforming agricultural production and food systems. Despite this importance, their socioeconomic implications remain insufficiently understood. This paper examines the relationship between agrifood value chain participation and income inequality. Using panel data from 137 countries over the period 1990–2020, we find a negative association between global agrifood value chain participation and income inequality, largely driven by the food and beverage sector. Delving into the underlying mechanisms, we show that this inequality‐reducing effect operates through labor reallocation away from informal, low‐productivity agricultural activities towards more formal and better‐paid downstream processing jobs, and a process of structural upgrading toward industry and services in countries that deepen their participation in the food and beverage sector. We also highlight significant disparities across regions and income groups. These findings carry significant policy implications and underscore the need for policymakers in developing countries to strengthen agrifood value chains through further transformation, with the aim of increasing incomes, generating employment, and reducing income inequality.