Issues of Governance and Upgrading
Edited by Hubert Schmitz
Chapter 5: The underground revolution in the Sinos Valley: a comparison of upgrading in global and national value chains
5. The underground revolution in the Sinos Valley: a comparison of upgrading in global and national value chains Luiza Bazan and Lizbeth Navas-Alemán 1. INTRODUCTION The recent debate on global value chains has been concerned with the inﬂuence of global buyers on the prospects for manufacturers in developing countries. Gereﬃ (1999), the pioneer of this literature, has deﬁned value chain governance as the coordination of diﬀerent and dispersed activities involved in a chain. Since these activities aggregate diﬀerent value at each stage, being the governor in a value chain ultimately implies deciding who in the chain performs the better remunerated activities as well as the less lucrative ones. Thus, it is clear that the implications of chain governance go far beyond merely organizing activities: governance is intimately linked with upgrading and the distribution of gains along the chain. While the global chain literature emphasizes that the upgrading prospects of local producers are determined from outside the locality, the cluster literature suggests that advances in upgrading depend above all on relationships within the locality. Particular attention is given to cooperation between local producers and to the role of public and private support services (Nadvi, 1997; Rabellotti, 1997; Schmitz, 1995). However, this body of literature has increasingly acknowledged the need to include external linkages in the analysis of upgrading processes (Nadvi and Schmitz, 1999). In this chapter we combine the value chain and cluster approaches to answer the following questions: What type of chain do local ﬁrms...
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