The article provides insights into the drivers of spatial re-localisation within the production networks of the solar photovoltaic (PV) industry. In doing so, we combine the perspectives of Global Value Chain (GVC), Global Production Network (GPN) and institutional path creation perspective to analyse the relocation and upgrading of multinational corporations (MNCs) in Malaysia using interviews and trade data. Our findings show that institutional path creation has helped to promote the completeness of the entire solar PV value chain in Malaysia, with the state actively intervening and creating new pathways by learning from the experience of the electronics industry, especially in the pre-foundation phase. Nevertheless, the path creation is also limited in that they have only been able to open windows of investment and trade opportunities within the different segments of the GVC without doing much to promote technological learning and spillover effects as the governance structure of the value chain is integrated. We find that other factors are less helpful in promoting local spillovers – exportoriented policies, energy policies and domestic industry dynamics due to lack of policy coordination. The results draw attention to some important issues that deserve closer consideration and contribute to the theoretical discussion within the GVC and GPN literature. First, path creation occurs at both levels - at the level of institutions and at the level of firms’ strategic decisions. Second, institutional path creation acts as exogenous shocks to firm path creation leading to different strategic choices, and the two reinforce each other. In other words, we have shown the complexity of path creation in the context of GVC and GPN. Third, institutional path creation is subject to dynamic coordination among agencies, without which path formation is constrained.
{"title":"Spatial Re-Localisation in Global Value Chains and Global Production Networks: Path Creation Perspective","authors":"VGR Chandran, Sonia Kumari Selvarajan Selvarajan, Wong Pui Wah, Sarpaneswaran Subramaniam","doi":"10.22452/ijie.vol15no4.4","DOIUrl":"https://doi.org/10.22452/ijie.vol15no4.4","url":null,"abstract":"The article provides insights into the drivers of spatial re-localisation within the production networks of the solar photovoltaic (PV) industry. In doing so, we combine the perspectives of Global Value Chain (GVC), Global Production Network (GPN) and institutional path creation perspective to analyse the relocation and upgrading of multinational corporations (MNCs) in Malaysia using interviews and trade data. Our findings show that institutional path creation has helped to promote the completeness of the entire solar PV value chain in Malaysia, with the state actively intervening and creating new pathways by learning from the experience of the electronics industry, especially in the pre-foundation phase. Nevertheless, the path creation is also limited in that they have only been able to open windows of investment and trade opportunities within the different segments of the GVC without doing much to promote technological learning and spillover effects as the governance structure of the value chain is integrated. We find that other factors are less helpful in promoting local spillovers – exportoriented policies, energy policies and domestic industry dynamics due to lack of policy coordination. The results draw attention to some important issues that deserve closer consideration and contribute to the theoretical discussion within the GVC and GPN literature. First, path creation occurs at both levels - at the level of institutions and at the level of firms’ strategic decisions. Second, institutional path creation acts as exogenous shocks to firm path creation leading to different strategic choices, and the two reinforce each other. In other words, we have shown the complexity of path creation in the context of GVC and GPN. Third, institutional path creation is subject to dynamic coordination among agencies, without which path formation is constrained.","PeriodicalId":38279,"journal":{"name":"Institutions and Economies","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135761712","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study assesses the state of global value chain (GVC) participation by manufacturing firms in Vietnam and examines the impact of GVC participation on labour productivity. Utilising firm-level data from the Vietnam Technology and Competitiveness Survey and Vietnam Enterprise Survey from 2009 to 2018, we employ panel fixed-effect regression to analyse the dynamics. The findings show that Vietnam’s GVC participation has been driven mainly by backward rather than forward linkages, signifying a reliance on foreign inputs for exports. The study found a positive impact of backward and forward GVC participation on labour productivity. However, the results show a stark contrast when considering the degree of GVC participation (i.e. GVC participation index). While forward GVC participation positively impacts labour productivity, backward GVC participation demonstrates a negative effect. The results partly reject the learning-to-learn hypothesis while supporting the notion that productivity improvements in Vietnam are associated with learning-by-exporting and learning-by-supplying. We suggest that the prioritisation of forward GVC participation should be accompanied by well-designed backward participation strategies to promote labour productivity. The study concludes with a few policy implications.
{"title":"Global Value Chain Participation and Labour Productivity among Manufacturing Firms in Vietnam","authors":"Tran Thi Hue Hue, Upalat Korwatanasakul Korwatanasakul","doi":"10.22452/ijie.vol15no4.2","DOIUrl":"https://doi.org/10.22452/ijie.vol15no4.2","url":null,"abstract":"This study assesses the state of global value chain (GVC) participation by manufacturing firms in Vietnam and examines the impact of GVC participation on labour productivity. Utilising firm-level data from the Vietnam Technology and Competitiveness Survey and Vietnam Enterprise Survey from 2009 to 2018, we employ panel fixed-effect regression to analyse the dynamics. The findings show that Vietnam’s GVC participation has been driven mainly by backward rather than forward linkages, signifying a reliance on foreign inputs for exports. The study found a positive impact of backward and forward GVC participation on labour productivity. However, the results show a stark contrast when considering the degree of GVC participation (i.e. GVC participation index). While forward GVC participation positively impacts labour productivity, backward GVC participation demonstrates a negative effect. The results partly reject the learning-to-learn hypothesis while supporting the notion that productivity improvements in Vietnam are associated with learning-by-exporting and learning-by-supplying. We suggest that the prioritisation of forward GVC participation should be accompanied by well-designed backward participation strategies to promote labour productivity. The study concludes with a few policy implications.","PeriodicalId":38279,"journal":{"name":"Institutions and Economies","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135761718","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-01DOI: 10.22452/ijie.vol15no4.1
Upalat Korwatanasakul
The study provides a critical analysis through the lens of the global value chain (GVC) framework with empirical data on value-added trade to explain Thailand's middle-income trap (MIT) by matching GVC data at the firm, industry, and country levels with the economic development trajectory. The results show that participation in GVCs contributes to initial industrialisation and economic development. However, it does not guarantee subsequent technological upgrading, as there is a risk of falling into the middle-income technology trap (MITT). Thailand is highly dependent on passive technology and specialisation imposed by headquartered countries, trapping the country in the middle of value chains with limited knowledge and technology transfer. As a result, Thailand has fallen into the MITT, where it cannot sustain growth and catch up with the more innovative advanced economies, leading to it falling into the MIT. To escape both traps, the government can consider policies that address inadequate knowledge and technology transfer and the lack of capacity of local firms.
{"title":"Thailand and the Middle-Income Trap: An Analysis from the Global Value Chain Perspective","authors":"Upalat Korwatanasakul","doi":"10.22452/ijie.vol15no4.1","DOIUrl":"https://doi.org/10.22452/ijie.vol15no4.1","url":null,"abstract":"The study provides a critical analysis through the lens of the global value chain (GVC) framework with empirical data on value-added trade to explain Thailand's middle-income trap (MIT) by matching GVC data at the firm, industry, and country levels with the economic development trajectory. The results show that participation in GVCs contributes to initial industrialisation and economic development. However, it does not guarantee subsequent technological upgrading, as there is a risk of falling into the middle-income technology trap (MITT). Thailand is highly dependent on passive technology and specialisation imposed by headquartered countries, trapping the country in the middle of value chains with limited knowledge and technology transfer. As a result, Thailand has fallen into the MITT, where it cannot sustain growth and catch up with the more innovative advanced economies, leading to it falling into the MIT. To escape both traps, the government can consider policies that address inadequate knowledge and technology transfer and the lack of capacity of local firms.","PeriodicalId":38279,"journal":{"name":"Institutions and Economies","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135606721","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-01DOI: 10.22452/ijie.vol15no4.5
Swati Mehta, Angathevar Baskaran
This study examines the process, nature, and drivers of upgrading among Indian information technology (IT) services firms in the global value chain (GVC) by analysing the sector as a whole and examining three cases – Tata Consultancy Services (TCS), Infosys and Wipro. It uses a qualitative research approach and data obtained from secondary sources such as the Organization for Economic Co-operation and Development (OECD) Trade in Value Added (TiVA) online database, company websites and annual reports. The study found that the contribution of India’s IT sector to GVC is relatively high among service sectors. It is increasingly delivering high-value products, reflecting its upgrading within the GVC. Indian IT firms have gradually transformed from being subcontractors providing low-value-added products and services to providing complete projects and solutions. The three cases show that upgrading of India’s IT firms was mainly due to continuous efforts to build innovation capacity by forging partnerships with other technology leaders, start-ups, and academic institutions, and through acquisitions. India needs to design specific industrial policy with enabling institutions to increase domestic value-added (DVA) and develop a foreign direct investment (FDI) policy that focuses on attracting multinational corporations (MNCs) with GVC linkages.
{"title":"Upgrading within Global Value Chains and Innovation Capabilities: Lessons from Indian Information Technology Sector","authors":"Swati Mehta, Angathevar Baskaran","doi":"10.22452/ijie.vol15no4.5","DOIUrl":"https://doi.org/10.22452/ijie.vol15no4.5","url":null,"abstract":"This study examines the process, nature, and drivers of upgrading among Indian information technology (IT) services firms in the global value chain (GVC) by analysing the sector as a whole and examining three cases – Tata Consultancy Services (TCS), Infosys and Wipro. It uses a qualitative research approach and data obtained from secondary sources such as the Organization for Economic Co-operation and Development (OECD) Trade in Value Added (TiVA) online database, company websites and annual reports. The study found that the contribution of India’s IT sector to GVC is relatively high among service sectors. It is increasingly delivering high-value products, reflecting its upgrading within the GVC. Indian IT firms have gradually transformed from being subcontractors providing low-value-added products and services to providing complete projects and solutions. The three cases show that upgrading of India’s IT firms was mainly due to continuous efforts to build innovation capacity by forging partnerships with other technology leaders, start-ups, and academic institutions, and through acquisitions. India needs to design specific industrial policy with enabling institutions to increase domestic value-added (DVA) and develop a foreign direct investment (FDI) policy that focuses on attracting multinational corporations (MNCs) with GVC linkages.","PeriodicalId":38279,"journal":{"name":"Institutions and Economies","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135761714","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study aims to evaluate and, more importantly, examine the path of a successful young Chinese high-tech firm in upgrading and reconstructing its position in the global value chain (GVC) of the chip industry. We examine the existing GVC positions of chip firms, the motivations for the firm’s entry into the market, the choice of path to upgrading, and the attempt to restructure the GVCs. The study uses a qualitative approach, mainly interviews and secondary data. The findings suggest that devising and consistently implementing a targeted differentiation strategy, overcoming technological bottlenecks and developing products towards a high-value location, and targeting customers through open innovation and entrepreneurship are key for laggards to improve their position in the GVCs. Building an ecological alliance based on the existing ecosystem is an important means for upgrading a firm and rebuilding the GVC. This is possible for young firms in the emerging segments of Industry 4.0, which are moving into a highly digitised world where there are numerous market opportunities both internally and globally. We argue that the ability to upgrade requires not only internal capabilities, but also the creation of appropriate markets to support the development of capabilities. Our study also provides some managerial implications.
{"title":"Upgrading and Reconstruction of Global Value Chain: Case of Chinese Firm’s Catching Up Trajectory","authors":"Mingfeng Tang, Lulu Kong, VGR Chandran, Angathevar Baskaran","doi":"10.22452/ijie.vol15no4.3","DOIUrl":"https://doi.org/10.22452/ijie.vol15no4.3","url":null,"abstract":"This study aims to evaluate and, more importantly, examine the path of a successful young Chinese high-tech firm in upgrading and reconstructing its position in the global value chain (GVC) of the chip industry. We examine the existing GVC positions of chip firms, the motivations for the firm’s entry into the market, the choice of path to upgrading, and the attempt to restructure the GVCs. The study uses a qualitative approach, mainly interviews and secondary data. The findings suggest that devising and consistently implementing a targeted differentiation strategy, overcoming technological bottlenecks and developing products towards a high-value location, and targeting customers through open innovation and entrepreneurship are key for laggards to improve their position in the GVCs. Building an ecological alliance based on the existing ecosystem is an important means for upgrading a firm and rebuilding the GVC. This is possible for young firms in the emerging segments of Industry 4.0, which are moving into a highly digitised world where there are numerous market opportunities both internally and globally. We argue that the ability to upgrade requires not only internal capabilities, but also the creation of appropriate markets to support the development of capabilities. Our study also provides some managerial implications.","PeriodicalId":38279,"journal":{"name":"Institutions and Economies","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135761717","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-04-01DOI: 10.22452/ijie.vol15no2.2
Simplice A. Asongu, Nicholas M. Odhiambo
This study investigates the effect of globalisation on governance in 40 Sub-Saharan African countries for the period of 2000-2019, with particular emphasis on income levels (low income versus middle income), legal origins (English common law versus French civil law), landlockedness (landlocked versus unlandlocked), resource wealth (oil-rich versus oil-poor) and political stability (stable versus unstable). The empirical evidence is based on fixed effects regressions in order to control for the unobserved heterogeneity. Political, economic, social, and general globalisation variables are used, while three bundled governance indicators are also employed to assess five main hypotheses. From baseline findings, while all globalisation dynamics negatively affect political governance, only political and social globalisation dynamics have a negative incidence on economic governance. Social and general globalisation dynamics positively affect institutional governance. The hypotheses that higher income, English common law, unlandlocked, oil-poor, and politically-stable countries are associated with higher levels of globalisation-driven governance, are valid, invalid, and partially valid contingent on the globalisation and governance dynamics.
{"title":"The Comparative Economics of Globalisation and Governance in Sub-Saharan Africa","authors":"Simplice A. Asongu, Nicholas M. Odhiambo","doi":"10.22452/ijie.vol15no2.2","DOIUrl":"https://doi.org/10.22452/ijie.vol15no2.2","url":null,"abstract":"This study investigates the effect of globalisation on governance in 40 Sub-Saharan African countries for the period of 2000-2019, with particular emphasis on income levels (low income versus middle income), legal origins (English common law versus French civil law), landlockedness (landlocked versus unlandlocked), resource wealth (oil-rich versus oil-poor) and political stability (stable versus unstable). The empirical evidence is based on fixed effects regressions in order to control for the unobserved heterogeneity. Political, economic, social, and general globalisation variables are used, while three bundled governance indicators are also employed to assess five main hypotheses. From baseline findings, while all globalisation dynamics negatively affect political governance, only political and social globalisation dynamics have a negative incidence on economic governance. Social and general globalisation dynamics positively affect institutional governance. The hypotheses that higher income, English common law, unlandlocked, oil-poor, and politically-stable countries are associated with higher levels of globalisation-driven governance, are valid, invalid, and partially valid contingent on the globalisation and governance dynamics.","PeriodicalId":38279,"journal":{"name":"Institutions and Economies","volume":"108 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135326614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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