Local Enterprises in the Global Economy

Local Enterprises in the Global Economy

Issues of Governance and Upgrading

Edited by Hubert Schmitz

This book opens a fresh chapter in the debate on local enterprise clusters and their strategies for upgrading in the global economy. The authors employ a novel conceptual framework in their research on industrial clusters in Europe, Latin America and Asia and provide new perspectives and insights for researchers and policymakers alike.

Chapter 10: Global quality standards and technological upgrading in the Brazilian auto-components industry

Ruy Quadros

Subjects: development studies, development economics, economics and finance, development economics, geography, economic geography, innovation and technology, innovation policy


Ruy Quadros* 1. INTRODUCTION This chapter examines the implications of global quality standards for the upgrading prospects of local producers in developing countries. It draws on an investigation into the diffusion of global quality standards in the Brazilian automobile industry. The focus is on the local suppliers of auto parts but their experience can only be understood in the context of the value chain which is coordinated by their customers, the transnational component manufacturers and assemblers. The governance of the auto chain, therefore, commands attention in this chapter. The requirement for suppliers to meet certain standards and to have the standards verified by means of certification has become widespread in the auto industry in recent years. The process started with the International Organization for Standardization 9000 (ISO 9000) global quality standard, but more recently sectoral and nationally based standards have also become more prevalent, as will be discussed below. How might these standards affect linkages within the value chain, and what would this mean for technical cooperation within the chain and the upgrading possibilities for Brazilian suppliers in the automotive sector? Globalization brings increasing competition to developing country producers, both in export markets and also in domestic markets as tariffs are reduced. In the face of such competition, the most sustainable response for firms in developing countries is to upgrade. Upgrading means to produce more efficiently (process upgrading), to add value to manufactures and exports (product upgrading) and to move into more skilled activities...

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