State policies and upgrading in global value chains: A systematic literature review

Valentina De Marchi,Matthew Alford

doi:10.1057/s42214-021-00107-8

Valentina De Marchi, Matthew Alford

Open Access

https://doi.org/10.1057/s42214-021-00107-8

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Abstract

This paper examines the role of state policymaking in a context of global value chains (GVCs). While the literature acknowledges that states matter in GVCs, there is little understanding of how they matter from a policy perspective. We address this tension between theory and practice by first delineating the state’s facilitator, regulator, producer and buyer roles. We then explore the extent to which corresponding state policies enable or constrain the following policy objectives: GVC participation; value capture; and social and environmental upgrading. We do so via a systematic review of academic GVC literature, combined with analysis of seminal policy publications by International Organizations. Our findings indicate that state policymakers leverage facilitative strategies to achieve GVC participation and enhanced value capture; with regulatory and public procurement mechanisms adopted to address social and environmental goals. Mixed results also emerged, highlighting tensions between policies geared towards economic upgrading on the one hand, and social and environmental upgrading on the other. Finally, we suggest that effective state policies require a multi-scalar appreciation of GVC dynamics, working with multiple and sometimes competing stakeholders to achieve their developmental objectives.

Highlights

Global value chain (GVC) and global production network (GPN) frameworks are being increasingly adopted by academics and practitioners as a means to understand the global organization of industries and their developmental impact (De Marchi et al, 2020
This is reflected both in more robust theorization of the different roles states play in recent academic literature (Alford & Phillips, 2018; Horner, 2017; Horner & Alford, 2019; Mayer & Phillips, 2017; Smith, 2015), alongside an increasing appreciation among international organizations (IOs) of a need for state policies tailored to the specificities of coordinated production that distinguish GVCs from other forms of industrial organization (ILO, 2015; Mayer & Gereffi, 2019; UNCTAD, 2020; UNIDO, 2015; World Bank, 2020; World Trade Organization (WTO), IDE-JETRO, OECD, VIBE, & World Bank, 2019)
This reflects a move away from traditional liberal vs interventionist ‘one-sizefits-all’ debates regarding the role states can and should play, towards a more targeted appreciation of the particular global-local linkages that exist between lead firms, suppliers and a host of other stakeholders linked to GVCs

Summary

INTRODUCTION

Global value chain (GVC) and global production network (GPN) frameworks are being increasingly adopted by academics and practitioners as a means to understand the global organization of industries and their developmental impact (De Marchi et al, 2020). In the majority of cases analyzed wherein the state has played a facilitating role, a variety of economic upgrading outcomes have been identified, regarding product or inter-chain upgrading (see Table 4) This is especially apparent in relation to strengthening links between research institutions and local companies (knowledge infrastructure), to enable local firms to enter new industries and adopt more value-added activities (e.g., Bazavan, 2019; Butollo & Ten Brink, 2018). State as Regulator A number of cases demonstrate how national policymakers can influence value capture (and, to a lesser extent GVC participation), via its regulatory role – imposing restriction on foreign or local firms (see Table 2) To put these observations into wider context, and as reflected in our review of the gray policy literature, recent shifts in trade policy following a notable backlash against economic globalization (Horner & Alford, 2019) reaffirm the increased significance of the state’s regulatory role. In line with Morrison et al, (2008) and Giuliani, de Marchi, & Rabellotti (2017), the cases reviewed in this article suggest that larger and more capable firms are better equipped to exploit opportunities deployed by GVC-oriented policies, to improve their position in the chain, highlighting that the impact of policies might be uneven across firms (Behuria, 2019; Dannenberg et al, 2018; Pedersen et al, 2019; Plank & Staritz, 2016; Yoshida, 2017)

CONCLUSION

25 Kergroach

69 Bazavan

Findings

79 Hossain