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Using Global Commodity Chains to Study Industrial Upgrading

Uploaded by surfchick on Feb 20, 2005

Using Global Commodity Chains to Study Industrial Upgrading

The increasing integration of domestic economies with the world economy is a central feature of "globalization." What makes globalization different from earlier stages in the international division of labor is, in large part, the ability of producers to slice up the value chain, i.e., to break up of the production process of a commodity into many geographically separated steps (Porter, 1990; Krugman, 1995). This global dispersion of commodity chains increases opportunities for developing countries to participate and gain from trade because it provides greater room for them to specialize in the labor-intensive stages of the manufacturing process of a commodity. Industrial upgrading, from this perspective, involves moving up global commodity chains from labor-intensive activities to more capital- and skill-intensive economic activities that involve organizational learning to improve the position of firms or nations in international trade and production networks (Gereffi, 1999).

The concept of industrial upgrading encompasses several related levels of analysis: product characteristics, types of economic activity, intrasectoral shifts, and intersectoral shifts (Gereffi and Tam, 1998). At a product level, one can talk about the movement from simple to more complex goods of the same type (e.g., cotton shirts to men's suits). At the level of economic activities, there are various roles that involve increasingly sophisticated production, marketing, and design tasks. One typology includes: assembly, original equipment manufacturing (OEM), original brandname manufacturing (OBM), and original design manufacturing (ODM). A third type of industrial upgrading involves an intrasectoral progression, typically from the manufacture of finished items to the production of higher value goods and services involving forward and backward linkages along the supply chain. Finally, industrial upgrading may also be viewed as the intersectoral shift from low-value, labor-intensive industries to capital- and technology intensive ones (e.g., clothes to cars to computers). While firms generally implement industrial upgrading, the spatial context in which this activity occurs and is observed includes local, national, and regional economies.

In the specific historical context of the global apparel industry, one of the clearest qualitative indicators of industrial upgrading are the role shifts involved in moving from assembly (using imported inputs) to more integrated forms of manufacturing and marketing associated with the OEM and OBM export roles (Gereffi, 1995). Participation in assembly networks (often associated with export-processing zones) is considered the first step in the upgrading process because...

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Uploaded by:   surfchick

Date:   02/20/2005

Category:   Marketing

Length:   6 pages (1,263 words)

Views:   6639

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