In this chapter, the authors focus on innovation in global value chains and on the role that such chains play in building and deepening capability. They also focus on the trajectories along which firms, located in developing countries, once inserted into global value chains acquire or lose innovation capability. To do so, they bring together the global value chains and innovation systems approaches. Their key arguments are that global value chains interact with innovation systems in multiple ways and that these interactions have important implications for the speed, depth and overall quality of capability building in developing-country firms. They outline five innovation capability trajectories and show how capability building at the firm level interrelates with the various ways in which global value chains and innovation systems co-evolve.
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