Trade, Global Value Chains and Upgrading: What, When and How?

Abstract

This paper explains how successful innovation systems interact with trade and global value chains (GVC) participation to foster learning and technological upgrading. It conducts an empirical investigation of 74 developing countries for 3 years, 2000, 2005 and 2010, to show that, while some countries manage to trade and export across a large number of technological export categories, many remain embedded in the export of low technology goods with little movement technologically. The analysis looks at why this is the case and what factors account for how firms are able to leverage trade to learn and upgrade in some instances, but not all. The results show that the ability to technologically diversify across export categories is linked to stronger innovation systems, as measured by national capability indicators, such as public R&D investments, scientific publications, intellectual property payments and patents by residents. The results also confirm the rise of several outperforming countries, the emerging economies. We conclude that, in successful, outperforming countries, firms rely on several attributes of the innovation system to leverage knowledge flows within and outside of GVCs to build export capacity and diversify horizontally into new GVCs.Cet article explique comment les systèmes d'innovation efficaces interagissent avec les activités liées au commerce et à la chaîne de valeur mondiale (CVM) pour favoriser l'apprentissage et la modernisation technologique. Il décrit une enquête empirique sur 74 pays en développement sur trois années, 2000, 2005 et 2010, pour montrer que, si certains pays parviennent à commercer et à exporter un large spectre de technologies, beaucoup restent cantonnés à l'exportation de produits de basse technologie et avec peu de changements technologiques. L'article analyse les raisons derrière cela et les facteurs qui expliquent pourquoi, dans certains cas mais pas tous, les entreprises sont en mesure de tirer parti du commerce pour apprendre et se mettre à niveau sur le plan technologique. Les résultats montrent que la capacité à diversifier les catégories de produits technologiques voués à l'exportation est liée à des systèmes d'innovation plus forts, comme mesurés par les indicateurs nationaux de capacité tels que les investissements R&D publics, les publications scientifiques, les paiements et brevets de propriété intellectuelle déposés par les résidents. Les résultats confirment également l'essor de plusieurs pays surperformants que sont les économies émergentes. Nous concluons que dans les pays qui réussissent et qui sont surperformants, les entreprises s'appuient sur plusieurs attributs du système d'innovation pour tirer parti des flux de connaissances à l'intérieur et à l'extérieur des CVM pour renforcer la capacité d'exportation et se diversifier horizontalement dans de nouvelles CVM.

Middle-Technology Trap: The Case of Automotive Industry in Turkey

“…Lee et al (2018), for instance, conclude that building a strong local IS is key to upgrading while integrating into the GVCs, which only some developing countries such as South Korea have accomplished. Sampath and Vallejo (2018) and Amendolagine et al (2019) further highlight the role of capabilities and a strong IS in benefiting from GVCs. Thus, developing countries may face a middle-technology trap on the borders of local natural systems such as the IS and global artificial organisations such as the GVCs.…”

Unlocking the potentials of Micro and Small Enterprises (MSEs) in building local technological capabilities in agro-processing industry

“…The benefits a country would earn from trade and GVCs' participation strongly depends on national capabilities and linkages in national innovation systems (Lee, Szapiro, and Mao 2018;Sampath and Vallejo 2018). GVCs would help developing countries by improving access to information on the global market's requirements in terms of products, processes, technology and standards (Pietrobelli and Rabellotti 2011) which often happens through direct interaction of local firms with foreign clients.…”

Paths of economic development: a global evidence for the mediating role of institutions for participation in global value chains

“…Structural change that is due to GVC participation is essential for economic growth in the modern world. At the beginning of the GVC era, structural change took place mainly in the manufacturing sector; now researchers like Stehrer and St€ ollinger (2015) and Sampath and Vallejo (2018) have asserted that expansion of the manufacturing sector because of GVC participation is the driving force of economic growth.…”