Musa- Week 5_ Global Value Chains

Musa- Week 5_ Global Value Chains - ECO5073S Week 5 GLOBAL...

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ECO5073S Week 5: GLOBAL VALUE CHAINS Questions 5 & 6 Presented by: Musa Nxele 20 August 2015
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Upgrading Why is upgrading such an important concept in GVC policy and analysis?
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Background Upgrading concerns meaningful participation in the global chain For example, if countries are only engaged in assembling imported parts for overseas markets in export-processing zones, then they would develop neither the institutions, nor the know-how, nor the consumer markets needed to create and sustain entire industries Therefore there is a need to move up the value chain
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Definition(s) Economic upgrading and social upgrading, tied with environmental upgrading (think Perez) Upgrading is a bottom-up question: how do you move up the value chain? Macro picture: strategies used by countries, regions and other economic stakeholders to maintain or improve their positions in the global economy Economic upgrading ‘Economic upgrading’ is defined as the process by which economic actors firms and workers move from low-value to relatively high- value activities in GVCs
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Definition(s) Within the GVC framework, four types of upgrading have been identified: 1. Process upgrading , which transforms inputs into outputs more efficiently by reorganizing the production system or introducing superior technology; 2. Product upgrading , or moving into more sophisticated product lines; GVC theory contribution 3. Functional upgrading , which entails acquiring new functions (or abandoning existing functions) to increase the overall skill content of the activities; and 4. Chain upgrading , in which firms move into new, but often related industries
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Take functional upgrading, for instance Strategy in which the firm moves from manufacturing (seen as ‘low value added’) to related services in the VC Rents shift from the embodied manufacturing processes to the knowledge-intensive disembodied links in the chain Functional upgrading and the Smile Curve
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Is there a hierarchy in upgrading?
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