Q.

Is there a link between multinational value chains and income inequality between

nations?

Multinational value chains are usually the large firms involved in international trade and

foreign direct investment within and across countries. They perform set of activities such

as production of a good or service, its supply, distribution and post-sales activities.

Whereas “income inequality is an extreme disparity of income distributions with a high

concentration of income usually in the hands of a small percentage of a

population[ CITATION Car19 \l 1033 ]”.

Reduction of food supply in any particular region results in hunger and famine (Sen 3).

Owning food is the most primitive right of any person in a society. Entitlement set of a

person depends on two factors: endowment vector and an exchange entitlement mapping.

Exchange entitlement mapping depends on the legal, political, social and economic

characteristics of the person in a society. It also depends on production opportunities as

well as trade possibilities of resources and products. The division of products also involve

legal rights e.g. the capitalist rule of the entrepreneur, who owns the product (4).

Starvation develops as the endowment vector collapses (6). Entitlement failures (famine,

starvation) occur due to the shifts in ingredients of entitlement. In Bengal famine of 1943,

many people who were not given food died in front of the well-stocked food shops

because they lacked legal entitlement and not because of violation of their entitlements.
People’s ignorance, fixed food habits or lack of interest also lowers their food

consumption below their entitlements; this negligence leads to lot of the difference (7).

Starvation results because of two entitlement failures; direct entitlement failure and trade

entitlement failure. Direct entitlement failure occurs when maximum food entitlement ( F j

) declines because of the lesser food production for consumption. It happens when F j falls

for some food-producing group. The trade entitlement failure occurs when F j declines

when one obtain less food because of the trade exchange. It happens when amount of

commodity falls because of autonomous production decline as in case of drought or

demand insufficiency (Sen 9).

According to the Official Famine Inquiry Commission, the Bengal famine of 1943 was

the cause of serious shortage in the total supply of rice available for consumption in

Bengal, which badly affected the rural population of Bengal as in millions of people

starved and suffered, whereas not a single person died of starvation in Greater Calcutta

(Sen 11). The most affected group were fishermen, transporters, agricultural laborers,

nonagricultural labor and crafts while the least affected group was of peasants and

sharecroppers (12). This happened mainly due to the increase in the price of rice and

other commodities, and rural wages fell behind (14). It is doubted that the government

kept the industrial area of Calcutta on a very high priority for the constant supply of

essential foods during wartime obligation. These patterns shows that this massive

entitlement failure happened because of the trade entitlement failure rather than direct
entitlement failure (15). Further, the increase in the rice prices were not because of the

availability failure since in 1942, the food availability recorded 30% higher than the

previous year but in the same year (1942), the rice prices got doubled. These entitlement

failures correspond to the powerful but uneven, expansionary forces working on the

economy of Bengal (16). All these evidences show that there is a huge link between

multinational value chains and income inequality among nations.

References
Kopp, Carol M. "Income Inequality." 7 November 2019.

Sen, Amartya. "Ingredients of Famine Analysis: Availability and Entitlements." The Quarterly Journal of

Economics 96.3 (1981): 433-464. <https://www.jstor.org/stable/1882681>.