Abstract
This paper presents a hypothesis stating that at the initial stage of growth by a latecomer, increased participation in the global value chain (GVC) is necessary to learn foreign knowledge and production skills, that functional upgrading at middle-income stage requires effort to seek separation and independence from existing foreign-dominated GVCs, and that latecomer firms and economies might have to seek reintegration back into the GVC after establishing their own local value chains. This paper aims to verify this “in–out-in-again” hypothesis by looking into firm cases of upgrading in Korea and Brazil. Trends in the share of foreign value-added in gross exports (FVA) in successful catching-up economies of Korea and Taiwan, including China recently, are consistent with this pattern. Regression results also confirm a negative correlation between the degree of local creation and diffusion of knowledge and FVA values, such that gaining increased local knowledge is a basis for increasing (reducing) domestic value-added (foreign value-added). Given that this variable of local creation and diffusion of knowledge is a key innovation system variable, this finding implies that building local innovation systems is the key in making a possible upgrade while being integrated into the GVC.
Cet article présente une hypothèse selon laquelle, au stade initial de la croissance d’une entreprise entrée tardivement sur un marché, une participation accrue à la chaîne de valeur mondiale (CVM) est nécessaire pour acquérir les connaissances et les compétences de production étrangères. Selon cette hypothèse, pour une entreprise à revenu intermédiaire, passer au niveau supérieur de façon fonctionnelle nécessite des efforts pour devenir indépendant et se distinguer des CVM existantes dominées par des étrangers. Enfin, l’hypothèse suggère que les entreprises et économies entrées tardivement pourraient avoir à se réintégrer dans la CVM après avoir établi leur propre chaîne de valeur locale. Cet article vérifie cette hypothèse en examinant des cas d’entreprises passant au niveau supérieur en Corée et au Brésil. Les tendances de la VAE (part de la valeur ajoutée étrangère dans les exportations brutes) dans les économies émergentes à succès sont compatibles avec ce modèle. Les résultats de régression confirment une corrélation négative entre la création locale de connaissances et les valeurs de la VAE, de telle sorte que l’augmentation des connaissances locales est la base pour augmenter la valeur ajoutée nationale (réduire valeur ajoutée étrangère). Cette constatation implique que la construction de systèmes locaux d’innovation est la clé de la mise à niveau via la CVM.
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28 June 2018
Unfortunately the wrong surname of the guest editor Sampath was inserted during the typesetting process. The correct name is Gehl Sampath.
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Acknowledgements
The authors would like to thank two anonymous referees, the Copenhagen Workshop participants, including K. Nadvi, and guest editors (Rabellotti, Lema, and Sampath) for valuable comments for revision. The authors gratefully acknowledge the support provided by the National Research Foundation of Korea (Grant no. NRF-2016S1A3A2923769).
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Appendices
Appendix A
See Table A1.
Appendix B
Regression analysis in this paper involves the following economies: Argentina, Australia, Austria, Belgium, Bulgaria, Brazil, Canada, Switzerland, Chile, China, Colombia, Costa Rica, Germany, Denmark, Spain, Finland, France, the United Kingdom, Greece, Hong Kong, China, Hungary, Indonesia, Ireland, Iceland, Israel, Italy, Japan, Korea Rep., Luxembourg, Mexico, Malaysia, the Netherlands, Norway, New Zealand, Philippines, Poland, Portugal, Russian Federation, Saudi Arabia, Singapore, Sweden, Thailand, Turkey, Taiwan, the United States, and South Africa.
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Lee, K., Szapiro, M. & Mao, Z. From Global Value Chains (GVC) to Innovation Systems for Local Value Chains and Knowledge Creation. Eur J Dev Res 30, 424–441 (2018). https://doi.org/10.1057/s41287-017-0111-6
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DOI: https://doi.org/10.1057/s41287-017-0111-6