From Reverse Engineering to Reverse Innovation: GPNs and the Emerging Powers

Abstract

With an emphasis upon possibilities of reverse innovation—whereby products made and sold at low costs in emerging economies would engage developed countries or, rather the multi-national corporations (MNCs)—that global production networks (GPNs) hold, this chapter argues that the changing configuration of global production promises not only reduction of transaction costs but also a definite knowledge advantage to the emerging economies, as India. Moving beyond the reverse engineering phase, GPNs could be mutually beneficial in ultimately progressing towards emerging economies expanding their horizon of developing technology, from the frugal engineering type to larger ‘general-purpose’ technology. These efforts, the authors suggest, would result in both economic and social upgrading of consumers and producers in the emerging economies.