As supply chains became global in scope, and more intermediate goods are traded across borders, the concept of global value chains (GVC) has become more relevant in understanding newly emerging economic relations (UNCTAD, 2013). A key issue is the possibility of upgrading with GVC. However, Giuliani, et al. (2005) conclude, based on their studies of firms in Latin America, that process or product upgrading has occurred to some extent, but functional upgrading and inter-sectoral upgrading is rare. Similarly, Pietrobelli and Rabellotti (2011) observe that the GVC approach has paid less attention to how local institutions condition the upgrading opportunities of business activities, and pointed out the supplementary role by the Schumpeterian or Innovation System (IS) perspectives. The IS refers to the elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge at the national, sectoral and firm levels (Lundvall, 1992; Lee and Malerba, 2017). Compared to the GVC approach, they emphasize the ‘within-nation’ variables than the international variables affecting economic growth. Thus, there is an emerging call for a need to integrate the two approaches, GVC and IS, with the recent initiatives by Lundvall (2016).
Simultaneously, another emerging question is the Fourth Industrial Revolution (4IR hereafter; Schwab 2016), which should affect the interface between the GVC and IS. While export-oriented manufacturing has been a critical part of the catching-up development story in emerging economies, it has also run into trouble as domestic wages rise but the products remain in low-end segment, thus some economies are showing signs of being stuck into the so-called “middle income trap” (World Bank 2010; Lee 2013). The 4IR may re-write the rules of manufacturing. With low-cost labour, a less effective strategy to attract investment and with the increasing trends of automation, we see a trend towards re-shoring of manufacturing back to the rich world. However, the 4IR may also open up new windows of opportunity (Perez and Soete 1988) in that the 4IR would bring in diverse forms of disaggregation and disintegration of the manufacturing process (Schwab 2016: 62), which could open up new entry points for latecomers. In sum, the 4IR can be both a new window of opportunity and a further source of difficulties for emerging economies.
This special issue invites research that attempts to seek a linkage between GVC and IS approaches in the context of the arrival of the 4IR. Papers with strong policy implications are invited on:
- How will the 4IR change GVCs in different parts of the world?
- What are the ‘right and dynamic’ modes of engaging with GVC in terms of building effective national (or sectoral) innovation systems?
- How should countries and firms respond to the rise of the 4IR to take advantage of its opportunity side?
Send abstracts of up to 500 words to the Guest Editors by June 15 2017
Full Paper Submission: 15 February 2018
Publication: Issue of June 2018