Subordinate, defiant, and path-breaking: alternative upgrading trajectories out of the middle-income trap in the Argentine auto parts and biotechnology value chains

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Abstract Bridging together the Middle-Income Trap (MIT) literature with the Global Value Chains (GVCs) approach may provide a more fine-grained understanding of the middle-income (MI) countries’ developmental dilemmas. While the former identifies the structural challenges these countries face, the latter provides analytical tools to explore how MI firms may overcome the hurdles posed by the global organization of production and trade as they strive to enter more technology- and knowledge-intensive segments of the GVCs. This paper undertakes this approach through four case studies of relevant Argentine firms pursuing upgrading in a natural resources-intensive and a classical manufacturing sector: agrobiotechnology and auto parts. Through a structured comparison, we inductively characterize three distinctive trajectories of upgrading, which we call subordinate, defiant, and path-breaking. They differ in the type of upgrading they entail, the technological and productive capacities required and the level of autonomy they grant to MI firms within the GVC. Furthermore, we identify two varying sets of factors—the organization of the GVC and the level of external support by domestic institutions—that make each trajectory more or less likely. The paper concludes by discussing the aggregate implications of each trajectory for countries seeking to break out of the MIT.