1 - Introduction

Summary

This book is in many ways a follow-up to our earlier edited book (Nathan, Tewari and Sarkar, 2016). While that book dealt with labour conditions and labour issues in global value chains (GVCs) in Asia, this book deals with the manner in which upgrading and innovation have taken/can take place in GVCs; once again, with a focus on the Asian experience.

This ‘Introduction’ starts out by listing the various dimensions of a GVC; within this, emphasis is placed on the GVC as embodying a division, albeit a changing division, of knowledge and capabilities across geographies. After this, we define the ways in which firms may or may not strategically interact with GVCs. This is followed by listing the different types of upgrading, commonly discussed in the GVC literature. However, different types of upgrading enable the capture of rents, whether process or product rents, which are discussed in the next section. This passage through different types of rents itself depends on the manner in which knowledge is developed, both within and around value chains.

Thus, this introduction stresses upon a scheme where knowledge (which results in both process and product innovations and their corresponding rents) is crucial to development within and around value chains. There are many analyses of innovation, and in the context of many countries having made it from low-income to middle-income status, there is much discussion of the ‘middle-income trap’. Some books on the challenges of China's current economic development explicitly place it in the context of overcoming the middle-income trap (for example, Woo et al., 2012; David Shambaugh, 2016; Lewin, Kenney and Murmann, 2016).

Through case studies in Asian countries such as China, India, the Philippines, South Korea, and Sri Lanka, with an examination of diverse industries (electronics, telecom equipment, mobile phones, pharmaceuticals, automobiles, and even garments) this book looks at facets of the processes of industrial catch-up (Nayyar, 2013) and life after catch-up in the context of GVCs. How do firms and economies upgrade and innovate and move from being suppliers to becoming headquarter economies (Baldwin, 2016) or, in GVC-terms, how do firms in these economies becoming lead firms?