Handbook on Global Value Chains
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Handbook on Global Value Chains

Edited by Stefano Ponte, Gary Gereffi and Gale Raj-Reichert

Global value chains (GVCs) are a key feature of the global economy in the 21st century. They show how international investment and trade create cross-border production networks that link countries, firms and workers around the globe. This Handbook describes how GVCs arise and vary across industries and countries, and how they have evolved over time in response to economic and political forces. With chapters written by leading interdisciplinary scholars, the Handbook unpacks the key concepts of GVC governance and upgrading, and explores policy implications for advanced and developing economies alike.
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Chapter 28: Compressed development

Timothy J. Sturgeon and D. Hugh Whittaker

Abstract

It is broadly recognized that GVCs have come to exert a major impact in developing countries. GVC scholarship has mainly focused on how power and governance are exerted in cross-border production networks, on detailing the specific characteristics and effects of GVCs across industries and countries and on identifying the possibilities and pressures for industrial, economic and social upgrading – or downgrading – in the places where they touch down. What has been left out is how to square GVCs with development theory, especially macro-historical narratives of development and the shifting roles for the state, notably the basket of industrial policies associated with successful examples of ‘late development’ in East Asia. The authors make the connection between GVCs and development through a two-step process. First, because the strategic drivers of GVCs have been insufficiently articulated in GVC literature, they offer an evolutionary framework that includes waves of new technology, organizational paradigms and management models. Second, they argue that these historical shifts have altered the conditions for development strategies, from early through late development, to a ‘network’ development era roughly coterminous and intertwined with the rise of GVCs: beginning in the 1970s and accelerating in the 1990s and 2000s. They call this era ‘compressed development’, and refer to countries that have become integrated into the global economy most recently as ‘compressed developers’. They argue that the opportunities and challenges of compressed developers differ in important ways from early and ‘late’ developers, with implications for the role of the state and industrial policy.

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