Enabling an Innovation Ecosystem and Participation at the Higher End of Global Value Chains

Abstract

Moving up the global value chain requires an enabling innovation ecosystem alongside economy-specific endowments, a mix of supportive policies in broad areas of infrastructure and institutions, and other enabling factors. Examining sample economies globally and in developing Asia, the empirical results suggest that during the transition from a low level of upgrading in a global value chain to a medium-level one, efforts should focus on increasing the scale of innovation inputs, allowing firms to improve in many areas of their capacity to innovate. To move higher up a global value chain, the design of innovation policies should gradually emphasize the production of technological, knowledge, and creative outputs.