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Upgrading in Global Production Networks: State-of-the-Art Debates and Trajectories

This workshop explores the significance of Global Production Networks in facilitating entry for developing country producers, while addressing risks such as exclusion and inequality. Topics include governance, challenges, and upgrading trajectories. Case studies on aquaculture production networks in Asia emphasize product, process, and functional improvements. Public sector support and analytical frontiers like social and environmental upgrading are discussed. The workshop aims to capture opportunities and overcome challenges through a holistic approach.

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Upgrading in Global Production Networks: State-of-the-Art Debates and Trajectories

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  1. Presented at the Global Production Networks Centre at NUS (GPN@NUS) Launch Workshop, 26-27 January 2015 National University of Singapore Upgrading in Global Production Networks: State of the art Stefano Ponte Professor of International PoliticalEconomy Department of Business and Politics Copenhagen Business School sp.dbp@cbs.dk

  2. Why are GPNs important? GPNs can lower barriers to entry for developing country producers and service providers and open up specialized industry segments for export • do not necessarily need to build a whole industry back-to-front But also risks of • exclusion, marginalization • inequality, social polarization • immiserizing growth • increasing economic activity with declining real incomes

  3. Key debates Governance of GPNs Challenges and opportunities in GPN participation Geographic configurations Institutional frameworks Upgrading

  4. Source: UNCTAD 2013: 22

  5. Source: UNCTAD 2013: 23

  6. Upgrading • Improve value addition • Classic distinction: • Process upgrading • Product upgrading • Functional upgrading • Inter-chain upgrading

  7. Smile-curve of value added Baldwin et al 2014

  8. Upgrading (cont) Also important: • Volume • economies of scale • Portfolios of qualities • economies of scope • Other valorization processes • Fair trade, geographic indications, branding Some trajectories actually involve downgrading as well • Important in periods of crisis

  9. What factors explain upgrading trajectories?Case study of aquaculture GPNs in Asia EU-funded research project (SEAT) Aquaculture production networks originating in Asia • Tilapia, shrimp, prawns, pangasius • China, Vietnam, Thailand, Bangladesh • Focus on production and processing nodes Upgrading in terms of: • Improving product, process, volume and/or variety (in the same node of the GPN) • Changing and/or add functions (up- or downstream; in several nodes)

  10. GPN governance and upgrading

  11. Public sector support and upgrading

  12. Upgrading: New analytical frontiers Social upgrading • Capturingthegains.org • ILO ‘better work’ framework Environmental upgrading • Minimizing the environmental impact of production • with equal or improved economic performance • energy savings, new materials, new systems • Driving forces • limits of buyer-driven greening • ecolabels • Transmission mechanisms

  13. Conclusion • Opportunities and challenges in: • GPN participation • Economic, social and environmental upgrading • Upgrading answer is not always in ‘trading up’ • volume still important, wider portfolios (including lower quality), emerging markets and end-market diversification • Regulation and public sector support • Important, but helps mostly product and process upgrading • Needs to be devised in view of actual functioning and governance of value chains

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