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International Journal of Technological Learning, Innovation and Development
International Journal of Technological Learning, Innovation and Development


Special Issue on: "Global Value Chains and Innovation Networks: Prospects for Industrial Upgrading in Developing Countries"

Guest Editor: Dr. Olga Memedovic, United Nations Industrial Development Organization (UNIDO), Austria

Rapid technological advances, organisational innovations and internationally accepted standards for product descriptions and business process protocols, make fragmentation of activities into standardised units at all stages of a value chain increasingly possible. Liberal trade and investment regimes create economic incentives for outsourcing these fragmented activities to specialised producers in different locations around the world. Advances in information and communication technologies (ICTs), and their application in transport, supply-chain management and logistics, permit functional reintegration of the dispersed activities into new border-spanning business arrangements variously referred to as of global value chains (GVCs) and production networks (GPNs). A group of leading transnational corporations (TNCs) from developed countries is playing a key role in organising and coordinating these production systems.

Value chain fragmentation is increasing international trade based on differences in comparative advantages at a finer level of specialisation (as shown by the faster growth of international trade in intermediate goods than in final goods). These processes are attracting much attention in academic and policy discussions dealing with contemporary globalisation and industrial upgrading.

While the literature on contemporary globalisation agrees that the evolving international systems of production and trade better integrate markets for goods, services and factors of production, leading to a more efficient use of resources and welfare gains, little attention is given to various types of externalities, international interdependencies, and governance and policy implications that arise from these processes. The rise of global value chains and production networks has spurred industrialisation and upgrading processes in some developing countries, but has also resulted in, or at least made more obvious, striking asymmetries between countries in knowledge, technology and in state-capacity to understand and respond to the new realities of globalization.

We are also witnessing increased levels of risks and uncertainty in the global economy. Countries have become more exposed to the external competitive pressures then ever before. Intensified competition and the raising innovative capabilities of China and India are forcing prices down and production and technological capabilities up, in both goods and services, putting pressure on developing country producers to seek different routes of upgrading. Even in traditional industries and in domestic markets, producers in developing countries must innovate and learn fast to sustain their competitiveness. Much of the developing world is not prepared to deal with these emerging challenges. Because the system is evolving rapidly, it generates structural disturbances, volatility, and uncertainly that even developed countries find it difficult to deal with. Managing these processes properly calls for shared concerns and responsibilities for exploring new forms of governance and institutional innovations of collective actions at the local, national and supra-national level.

The GVC perspective provides a framework for understanding industrial governance (i.e. the non-market, inter-firm interactions and institutional mechanisms of coordination) in the emerging global production system. Knowledge properties, complexity, tacitness and partial excludability are used to explain various GVC governance forms. The GVC framework differentiates TNCs in retailers, branded marketers and branded manufacturers and sheds light on the dynamics of their coordination power (control over what, how, when and by whom will be produced) and their market power (higher concentration means higher income/resources for innovation and development). The GVC analyses helps to understand and explain the upgrading challenges developing countries’ firms face when interacting with other firms, and especially leading firms, in a sector specific global value chains.

For strategies and policies, understanding GVC characteristics (structure, geography, governance and institutions) is important because it raises three key issues:

  • What type of work is allocated to developing countries and firms in the chain and will such work sustain their jobs and incomes?
  • How much and what type of knowledge flows in GVC?
  • Can knowledge flow in GVCs allow local firms’ upgrading, and if so, what complementary flows are called for to sustain upgrading?

The GVC literature points out that linking up with foreign partners in GVCs potentially offers a developing country producer with greater prospects to enter foreign markets, and gain access to new skills, knowledge, technology and relevant information—a key factors for productivity enhancement and growth. Latecomers from developing countries can exploit their late arrival by tapping into new technologies, new products, and specific specialties within the vertical chain, rather than having to reproduce, domestically, the entire previous technological trajectory or the entire value chain. They can seek GVC involvement at the level of their technological competence and can leverage this involvement to reach higher competence.

But the question of how to leverage productivity gains through pursuing such strategies and to catch up is still open. Specialization can lead to marginalization in low value segments of the chain or be isolated in a few export-oriented firms. Reaping the benefits from GVC linkages is therefore not an automatic and linear process. Knowledge and technology do not freely flow in GVC. But even if they do and are freely accessible, they will be useful only when firms and nations have required absorptive capacity, and can leverage GVC engagement to stimulate broad-based and sustainable upgrading. Building absorptive capacity requires time, effort and investment, and above all the purposive and collective activity of society. Infrastructure, education, training, and R&D are needed to assimilate the existing stock of knowledge, and turn it to productive use. Governance institutions are needed for coordination and to support technology development. National economic and industrial strategies are needed to identify complementarities and to support positive GVC linkages, as technological learning and mastery may vary by firm, sector and technology. This is particularly important for developing countries striving to diversify their economic base, and to move from traditional to non-traditional products and activities. Policy interventions need to be devised to address positive and negative externalities. Policy instruments need to be coherent, concerted and properly formulated.

To sum up, the present global economic setting has raised international interdependences, causing local industrial upgrading challenge to become more complex. Positive responses to these challenges will have many dimensions and involve many actors. To better understand this challenge more empirical research and analyses of country and sector-specific cases, using multidisciplinary approaches, are needed.

This Special Issue seeks to identify and assess, with a sub-sector focus and interdisciplinary approach, prospects for industrial upgrading by developing countries in the GVC context, and what the policy and institutional underpinnings of these processes are.

The papers will encourage discussion among scholars from various disciplines dealing with the globalisation in production, innovation and trade and their impact on global economic development, and will communicate their findings and recommendations to various stakeholders involved in decision-making process at firm, regional, national and supra-national level.

Subject Coverage
We welcome new and innovative contributions addressing following themes, including but not limited to:
  • Knowledge dynamics and transfer within GVCs : an overview of the issues and a way forward. Mechanism of knowledge flows in GVCs:

    • What are the critical factors explaining different types of knowledge transfer in GVC?
    • What is the relationship between the typology of chain governance and knowledge flows along the value chain?
    • What are the sources and dynamics of chain leaders’ market and coordination power? (Concentration of power and distribution of gains in GVCs);
    • Do chain leaders have motives for improving local firms’ upgrading?
    • Is GVC governance sector specific?
  • Interactions of GVC governance and governance at the local (firm/cluster, and regional innovation system) level, national and supra-national level (role of bilateral and multilateral institutions); Corporate social responsibility issues, etc.
  • Global production and innovation networks:

    • Are we witnessing a convergence in GVC structure towards new structure? Case studies revealing emerging issues and contributing to the clarification of the concepts (e.g. value chain modularity, ‘platform leadership’, ‘open innovation’ model, and others).
    • Global dispersion of innovative activities (outsourcing of R&D activities) and implications for the global dispersion of income and power, and hence on upgrading and industrial development.
  • Role of logistics in GVCs:

    • How logistics capabilities may impact local/regional industrial development in general, and capabilities in specific industries in particular?
    • Creation of logistics value chains.
    • Modern concepts of logistics (components of the concept: modern infrastructure suitable for multi-modal transport, supply chain management, trade facilitation, etc.).
    • Is it possible to benchmark logistics capabilities?
  • Dynamics of globalisation in specific industries: agrifood, wood, textile and clothing, leather, automobiles, electronics, pharmaceuticals, generic drugs, GMOs, etc.

    • Why are some industries better globally integrated then others?
    • Do we witness changes in the geography of these industries?
    • What is the impact of preferential trade agreements on geographical dispersion of value chains?
    • The intersection of global, regional and local value chains in specific industries: what lessons can be learned from successful/ unsuccessful innovation and learning attempts in the same sector across countries?
    • Can we identify emerging issues and key factors underpinning firms (and their clusters) to develop their dynamic capabilities that are applicable across industries?
    • What are the differences in services, manufacturing, and in agriculture?
  • Inter-chain innovations: how to create new local industrial capabilities?

    • What are the mechanisms underpinning knowledge flows and creation within and between different value chains?
    • What are the prospects for technological learning and innovation through exploring specialised market niches utilising various dominant technologies or design concepts and applying these to the development of new technological variants (including case studies on cooperation with lead firms in these areas); through product differentiation and branding (also using national brands), or through exploring alternative marketing channels?
    • What are the lessons to be learned from successful cases on inter-chain innovation for pursuing strategies of diversification of economic base in late-industrialising countries?
  • Market characteristics GVC are supplying and their impact on industrial upgrading of firms participating in those chains:

    • What lessons can be learned from local firms and their clusters participating in GVC supplying global markets?
    • What lessons can be learned from local firms and their clusters participating in GVC supplying local/regional markets?
  • GVCs and poverty redaction:

    • How can least developed countries (LDC) technologically upgrade through participating in GVCs?
    • What could be the industrial strategy pillars relevant for LDC context?
    • Catch-up concept and LDC context.
  • SMEs and GVCs: what role for SMEs in GVCs?

    • What are the challenges SMEs are confronted with when participating in GVCs (size-economies of scale, ownership, contracts, IPRs, access to finance, access to markets-getting closer to consumers understanding TNCs strategies) and are they sector-specific?
    • What are the possible strategic entry points for SMEs in GVC?
    • What are policy implications?
  • Intersection of value chain approach with other related approaches to sectoral analysis, including cluster development analysis, sub-sector analysis, market analysis, SWOT analysis, competitiveness analysis, regional and national system of innovation analysis, etc.
  • Linkages between value-chain framework and other disciplines (viz. institutional economics; economic sociology and economic geography; management science; business economics and history; international trade and international economics and industrial development; public economics, etc.).
  • Role of external and internal resources for development:

    • Role of FDI (before and today), licensing, joint ventures, sub-contracting, import of capital goods, technical assistance bilateral and multilateral;
    • Role of indigenous innovation effort and how it should be supported;
    • Role of extension and business development services offered by intermediary organisations, private and public (viz. industry associations, universities, technical schools, standards, metrology and calibration infrastructure, productivity centers, investment and export promotion agencies), in acquisition of internal and external resources;
    • Role of IPRs for technology transfer.
  • Industrial policy in the era of globalisation of production, innovation and trade:

    • What are the spaces for industrial policy in the context of multilateralism and regionalism? Industrial policy, in the context of preferential trade agreements and regional economic agreements.
    • What is the role of industrial policy in the Post-Post-Washington consensus era? Collective actions and public policy.
    • Linkages between upgrading strategies (from OEM to GLC and to OBM, and from OEM to ODM and to OBM) and stages of industrial development.
    • What models can guide industrial and trade policy (e.g. learning regions and cities, various agglomerations, clusters, sectoral and regional innovation systems, and others)?
    • What are the roles of tools like economic zones, industrial parks, valley, and others? What are the linkages with other policies?
    • What is the ability of a late-industrialising country to support industrial upgrading through strategies and policies in the present global setting? Do developing countries need capacity building for value chain analyses and other complementary analyses? Do they need capacity building for formulating their industrial strategies and policies?
  • Value chain mapping:

    • Why is mapping of value chain important for policy?
    • How can governments, industry-related institutions/organisations and universities make use of GVC approach in their strategic thinking and decision-making?
    • Are there any policy advances made in applying this strategic thinking to governments and industry related organisations?
    • How can international community use GVC approach in technical cooperation activities?
  • Globalisation in industry: what is the impact of labour market characteristics? How does the spread of GVCs influence composition of global labour market in terms of job creation, mobility and upgrading of skills?

    • Globalisation of firms from late-industrialising countries (SMEs in particular): What are the underlying factors of their internationalisations (push and pull factors)?
    • What are the implications for global division of labour and for south-south technology transfer? Case studies and analysis of factors underpinning these processes.
  • Benchmarking:

    • What indicators can be used for benchmarking vertical specialisation in trade and industrial upgrading? (Proxies, methods, availability of data);
    • Value chain benchmarking by sectors and countries: what methodology and tools to use?

Notes for Prospective Authors

Submitted papers should not have been previously published nor be currently under consideration for publication elsewhere

All papers are refereed through a peer review process. A guide for authors, sample copies and other relevant information for submitting papers are available on the Author Guidelines page

Important Dates

Extended abstract submission (max. 500 words) due: 30 November 2007

Full paper submission due: 31 January 2008