Abstract
AbstractIn this paper, I present a framework for GVC‐oriented industrial policy that merges the so‐called GVC perspective and the so‐called developmentalist perspective—the latter of which is a perspective that industrial policy is most often analysed through, but has been somewhat neglected by the GVC perspective. I argue that the GVC perspective too quickly dismisses the relevance of industrial policy in the East Asian development experience, particularly those in South Korea and Taiwan between roughly 1960 and 1990. By drawing on the industrialisation experiences of these two countries, my framework for industrial policy suggests that the GVC perspective's ideas for industrial policy would be strengthened by more clearly acknowledging the continued importance of three observations by the developmentalist perspective: (a) the need for governments in developing countries to bargain with foreign investors for the purpose of domestic industrialisation; (b) policy design should not only focus on increasing exports, but also focus on replacing some imports with domestic production; and (c) linking up to the value chains of transnational corporations based in high‐income countries can bring about some benefits, but ultimately, successful industrialisation necessitates a degree of competing with transnational corporations. State‐owned enterprises have historically played an important role in this respect.
Highlights
THE “global value chains (GVCs) PERSPECTIVE” AND THE “DEVELOPMENTALIST PERSPECTIVE”Since the early 1990s, a globalisation of production has taken place, driven by falling transport costs, advances in information and communication technology, and lower trade and investment barriers
Scholars that study industrialisation and economic development issues from a GVC perspective have in recent years showed an interest in if and how the expansion of GVCs should affect industrial policy in developing countries
While this perspective does not lack in diversity of opinions or can be said to encompass the entire literature on GVCs and development, the perspective does seem to merge around the view that industrial policy in developing countries today has to take a different form compared to the “traditional” policies that characterised the development path of the Asian tigers
Summary
1 | INTRODUCTION: THE “GVC PERSPECTIVE” AND THE “DEVELOPMENTALIST PERSPECTIVE”. Since the early 1990s, a globalisation of production has taken place, driven by falling transport costs, advances in information and communication technology, and lower trade and investment barriers. The increase in FDI inflows has mostly taken place in developing countries, whose share of world FDI inflows surged from 17% to 46% between 1990 and 2017 (see Figure 2, which depicts the trend in absolute numbers as well). This growth in international trade and offshoring is underpinned especially by the fragmentation of production processes and the dispersion of tasks and activities within them. This has led to complex and borderless business networks and production systems, popularly referred to as global value chains (GVCs)
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