Social Upgrading from Below?

Recent decades have witnessed an increasing integration of developing countries into global value chains (GVCs). This growing participation in global production sharing has raised hopes for economic upgrading within such value chains. However, globalization has intensified international competition, and achieving economic upgrading is not an easy task. Moreover, the social consequences of participating in GVCs are not always positive; however, they have received considerably less attention in the literature. This paper suggests a simple and parsimonious approach to measuring economic and social upgrading (and downgrading) in GVCs. Applying this parsimonious methodology and using quantitative secondary data, we analyze how widespread upgrading has been in four selected manufacturing GVCs: apparel, wood furniture, automotive, and mobile phones. We also investigate to what extent downgrading is part of the reality and undertake a comparative analysis across GVCs, regions and country groups (developing vs. developed countries). We find that the promise of industrial upgrading through participation in GVCs does not materialize for everyone. Indeed, economic upgrading has taken place in just over a quarter of the countries in our sample, among them mainly developing countries. Finally, we examine the relationship between economic performance and social performance in the different GVCs to investigate whether or not economic upgrading is typically associated with social upgrading. While patterns differ across GVCs, we find that economic upgrading is more likely to occur simultaneously with social upgrading than without, and vice versa. Our analysis, thus, suggests that economic upgrading is conducive to, but not sufficient for, social upgrading to occur.

Economic and Social Upgrading Dynamics in Global Manufacturing Value Chains: A Comparative Analysis

Agriculture, food and global value chains: issues, methods and challenges

Environmental and social upgrading are emerging in the global value chains (GVCs) literature as areas of investigation related to upgrading. A limited number of studies have been conducted to explore environmental upgrading processes and outcomes, while considerable research has analysed the relationship between economic and social upgrading in GVCs. However, the relationship between environmental and social upgrading still needs to be investigated. This qualitative empirical research explores this under-theorised area by studying apparel firms in South Asia, namely in Bangladesh and Sri Lanka, where social upgrading initiatives can be linked to environmental upgrading. Empirical findings suggest that there is a positive relationship between environmental and social upgrading in GVCs. Environmental upgrading not only results in increased wages, bonuses and allowances through skills development, learning and training but also results in improved working conditions. Employees are enthusiastic about being part of an environmental upgrading initiative.

PurposeThis paper aims to examine the relationship between economic upgrading (implementing higher value-added activities) and social upgrading (improvements in workers’ rights and employment) of supplier firms in global value chains (GVCs) governed by multinational enterprises (MNEs). This paper answers Buckley and Ghauri’s (2004) and Buckley and Strange (2015) calls to incorporate other theoretical approaches within the international business (IB) literature. Furthermore, the paper also responds to Lee and Gereffi (2015) argument, published in Critical perspectives on international business, of the need to incorporate the social impact of upgrading in the IB literature.Design/methodology/approachSemi-structured interviews were undertaken with representatives from five supplier firms each in Bangladesh and Sri Lanka, as well as with industry representatives.FindingsGovernance patterns within GVCs can create the conditions for economic upgrading leading to social upgrading achievements. Institutional factors also affect the conditions for social upgrading. Although moving to higher value-added activities is critical for supplier firms, this does not necessarily lead to social upgrading. This paper’s research findings suggest that the combination of economic and social upgrading is positively associated with suppliers manufacturing high value-added products and operating in relational networks. In contrast, economic upgrading, by itself, was limited to those firms manufacturing low value-added products, typically those in captive networks.Originality valueThis research is among an emerging body of literature seeking to integrate the GVC literature with the IB field. Importantly, it also contributes to the GVC literature by providing insight into an under-theorized aspect – the relationship between social and economic upgrading.

The article compares social upgrading trends in four global value chains (apparel, automobiles, electronics and it services) and six developing and emerging economies (Bangladesh, Brazil, China, India, South Africa and Vietnam). It applies a framework, which combines analyses of industry-specific governance modes with recent theoretical approaches from the field of industrial relations. The empirical results show that prospects for social upgrading within similar segments of a particular value chain considerably depend on the national context. The article thus highlights the importance of integrating the role of national institutions into global value chain analysis in order to better explain variegated upgrading dynamics across different countries and industries.

The Co-Evolution of Concentration in Mobile Phone Global Value Chains and Its Impact on Social Upgrading in Developing Countries

Confronted with mixed evidence linking economic upgrading in global value chains to improved social outcomes, proponents have called for a new emphasis on “social upgrading” to promote better employment, gender equality, and poverty reduction. Originally focused on a central role for states, unions, and social movements, the discourse on social upgrading has shifted, emphasizing the benefits of corporate social responsibility and global markets. Drawing on political economic, critical theory, and psychoanalytic paradigms, we explore the politics of this shift and argue that social upgrading is gradually being deployed as a neoliberal market fantasy, designed not to challenge the limits of market integration, but to obscure and deny them. The strength of the social upgrading discourse emerges less from its pretense toward objective, data-driven analysis, than its effectiveness as an ideological fantasy in meeting the contradictory, non-rational desires of experts and non-experts.

There is a growing literature on the impact of Covid-19 on commercial and labour conditions at suppliers in apparel global value chains (GVCs). Yet much less is known about the implications for suppliers operating in regional value chains (RVCs) in the global South. In this article, we focus on Eswatini, which has grown to become the largest African manufacturer and exporter of apparel to the region. We draw on a combination of firm-level export data and interviews with stakeholders before and after the Covid-19 lockdown to shed light on the influence of private and public governance on suppliers’ economic and social upgrading and downgrading. We point to the coexistence of two separate private governance structures: the first characterised by direct contracts between South African retailers and large manufacturers (direct suppliers); the second operating through indirect purchasing via intermediaries from relatively smaller producers (indirect suppliers). While direct suppliers enjoyed higher levels of economic and social upgrading than indirect suppliers before Covid-19, the pandemic reinforced this division, with severe price cuts for indirect suppliers. Furthermore, while retailers provided some direct suppliers with support throughout the crisis, this was not the case for indirect suppliers, who remain comparatively more vulnerable. In terms of public governance, the negative consequences of the lockdown on firms’ income and workers’ livelihoods have been compounded by the state’s ineffective response. Our paper contributes to the research on RVCs in the global South, enhancing our understanding of how different governance structures and external shocks affect firms’ and workers’ upgrading and downgrading prospects.

This research examines how institutional factors (public, private and social governance) Influence social upgrading in supplier firms in global value chains (GVCs) in the soccer ball industry of Pakistan. Using primary multi-source data, we found that institutional factors in GVCs play a critical role in the social upgrading of the industry. Furthermore, we revealed that social upgrading is an outcome of an interplay between public, private and social governance in GVCs.

The rise of global value chains (GVCs) has been associated with the rapid expansion of outsourcing by lead firms in the global North to interlinked networks of cross-border suppliers in developing countries. Outsourcing was facilitated by trade and financial liberalization initiated in the 1970s and 1980s, and driven by intense competitive pressures for cost reduction. GVC and global production network (GPN) analysis provide crucial insights into inter-firm coordination and governance, with diverse and uneven embeddedness across an expanding range of countries (Coe and Yeung, 2015; Dicken et al., 2001; Gereffi et al., 2001, 2005). The consequences for suppliers and workers have been mixed. The search for cost reduction went hand in hand with entry into relatively unregulated environments leading to what Appelbaum et al. (2005) have called ‘the race to the bottom’ in many industries. At the same time, buyer pressure for product quality and consistency has increased the demands on suppliers to comply with private standards and monitoring (Nadvi, 2008). For some the outcome has led to a combination of economic upgrading (suppliers moving to higher value activities) and social upgrading (better terms and conditions for workers), while others have experienced economic and social downgrading (Barrientos et al., 2011a; Lee and Gereffi, 2015). Global outsourcing has led to the creation of new architectures for the organization of production, trade and consumption in the global economy. Today multilateral organizations (including the WTO, World Bank and OECD) have acknowledged that GVCs have reshaped traditional trading patterns between nations. UNCTAD (2013) estimates that 80% of world trade now passes through GVCs. Furthermore the developing country share in global value-added trade increased from 20% in 1990 to over 40% today, and GVC participation contributes 28% to their GDP on average. Global production has opened up new opportunities for employment to millions of workers in developing countries. The International Labour Organisation (ILO) estimates that in 2013, 453 million jobs were GVC

This paper identifies several governance factors that enable economic upgrading and the link between economic and social upgrading /downgrading of smallholders and Abusa sharecroppers in Ghana's cocoa value chain (GCVC). The findings are based on qualitative interviews and focus group discussions with various actors in GCVC. Our findings suggest two types of economic upgrading: process and product upgrading, achieved by smallholder producers and Abusa Sharecroppers in GCVC. While process upgrading is enabled by governance factors such as price stabilization and controlling opportunistic behavior, transparency in the sale of certified beans and premium management is key for product upgrading. Regarding the link between economic and social upgrading, we reveal that process upgrading leads to the same outcome of social upgrading and downgrading for smallholders and Abusa sharecroppers due to governance factors such as production and purchasing policies and lack of resources and capabilities. However, product upgrading links to social upgrading and downgrading for smallholders and Abusa sharecroppers respectively owing to governance factors such as controlling resources and bargaining power. We provide insights into key actors and their interests, drivers of change and effects of incentives that play crucial roles in shaping governance factors that influence economic and social upgrading of smallholders and Abusa sharecroppers in GCVC. In our conclusion, we identify how regulations, institutional support and conflicts of interest are key for enabling upgrading of developing countries’ agricultural value chains.

Global value chains (GVCs) have changed the nature of production and specialisation around the world, including in agriculture and food sectors. This study takes an in-depth look at the landscape of agro-food GVCs and explores the factors that influence GVC participation by making use of a newly developed database on trade in value added for 20 agro-food sectors derived from the Global Trade Analysis Project (GTAP) database. The study also explores the benefits of GVC participation, viewed through the lens of domestic value added creation and employment, with a focus on the policy factors that influence these benefits. The study points to considerable variation in GVC participation across agro-food sectors, driven not only by product characteristics but also by policy factors related to trade and investment, the agricultural enabling environment and policies influencing service markets. The study shows that for agro-food sectors, trade barriers act as a tax on exports, reducing the domestic value added created from participation in agro-food GVCs.

The nontraditional export (NTE) sector promises to be the antidote to Africa's economic woes in the face of dwindling traditional exports. Adopting the Porter's Value Chain Framework and a case study design, we explore how alcoholic beverage companies in the African NTE sector could create value in their upstream, midstream, and downstream value chain activities through effective governance and digitization. In exploring these intricacies of governance and digitization within African global value chains (GVCs), we draw on two major case studies, Diageo South Africa and Kasapreko Ghana Limited. Our study shows that the NTE sector can contribute to both economic and social upgrading activities, contribute to industrialization and create international competitiveness for African firms. Second, GVC governance and digitization, even though still at its infant stages in Africa, has the potential in propelling economic value through the NTE sector.

This article explores the effect of an evolving global value chain (GVC) on the livelihoods and labor processes of traditional communities, a theme of great conjecture within the literature. We review the impact of the new surge of demand for acai within four traditional communities in Amapa, along with their production processes and work divisions within a specific understanding of their sense of territory. The research was conducted with field work involving participant observation, interviews, questionnaires and photographic records. The results allowed detailing the actors, the organization, the (informal) contractual process and the form of governance within the chain. The paper highlights how rising demand creates new conflicts and uncertainties for chain governance, and that this is directly linked to the nature of contractual informality and communal property rights. This adds to existing concerns with respect to the prospect of communities/labor gains (social upgrading) as a result of GVC insertion.