IDEAS home Printed from https://ideas.repec.org/a/pal/eurjdr/v33y2021i2d10.1057_s41287-020-00351-3.html
   My bibliography  Save this article

Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa

Author

Listed:
  • Sophie van Huellen

    (SOAS University of London)

  • Fuad Mohammed Abubakar

    (Cocoa Marketing Company GH Ltd)

Abstract

We revisit functional upgrading opportunities for developing and emerging market companies in the context of highly financialised food systems. We argue that the assessment of upgrading potential within the global value chain literature lacks consideration of constraints posed by financialisation, not only of the sector within which upgrading takes place but also by the global financial architecture more broadly. For the Ghanaian cocoa–chocolate sector, we show that financialisation acts as limiting factor to upgrading, with contradicting tendencies. First, financialisation of lead firms, eager to outsource non-core activities, has promoted cocoa processing in Ghana, but the resulting consolidation of power hinders further functional upgrading. Second, Ghana’s dependency on cocoa for foreign exchange earnings necessitates upgrading into higher value-added segments, while also undermining feasible upgrading strategies that build on domestic or regional markets first. These contradicting tendencies constitute a middle value-added trap, which is difficult but not impossible to overcome.

Suggested Citation

  • Sophie van Huellen & Fuad Mohammed Abubakar, 2021. "Potential for Upgrading in Financialised Agri-food Chains: The Case of Ghanaian Cocoa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(2), pages 227-252, April.
    • Handle: RePEc:pal:eurjdr:v:33:y:2021:i:2:d:10.1057_s41287-020-00351-3
    DOI: 10.1057/s41287-020-00351-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41287-020-00351-3
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41287-020-00351-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bonizzi, Bruno & Kaltenbrunner, Annina & Powell, Jeffrey, 2019. "Subordinate financialization in emerging capitalist economies," Greenwich Papers in Political Economy 23044, University of Greenwich, Greenwich Political Economy Research Centre.
    2. Maizels, Alfred, 1994. "The continuing commodity crisis of developing countries," World Development, Elsevier, vol. 22(11), pages 1685-1695, November.
    3. Gerald Epstein, 2019. "Political Economy and Comparative Central Banking," Chapters, in: The Political Economy of Central Banking, chapter 10, pages 234-263, Edward Elgar Publishing.
    4. Jan Fagerberg & Bengt-Åke Lundvall & Martin Srholec, 2018. "Global Value Chains, National Innovation Systems and Economic Development," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 533-556, July.
    5. Jennifer Clapp & S. Ryan Isakson, 2018. "Risky Returns: The Implications of Financialization in the Food System," Development and Change, International Institute of Social Studies, vol. 49(2), pages 437-460, March.
    6. C. Dolan & J. Humphrey, 2000. "Governance and Trade in Fresh Vegetables: The Impact of UK Supermarkets on the African Horticulture Industry," Journal of Development Studies, Taylor & Francis Journals, vol. 37(2), pages 147-176.
    7. Gerald Epstein, 2019. "A Political Economy Model of Comparative Central Banking," Chapters, in: The Political Economy of Central Banking, chapter 11, pages 264-310, Edward Elgar Publishing.
    8. Bruno Bonizzi, 2013. "Financialization in Developing and Emerging Countries," International Journal of Political Economy, Taylor & Francis Journals, vol. 42(4), pages 83-107.
    9. Keun Lee & Marina Szapiro & Zhuqing Mao, 2017. "From Global Value Chains (GVC) to Innovation Systems for Local Value Chains and Knowledge," Working Paper Series no99, Institute of Economic Research, Seoul National University.
    10. Jörg Mayer, 2012. "The Growing Financialisation of Commodity Markets: Divergences between Index Investors and Money Managers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(6), pages 751-767, June.
    11. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
    12. Tristan Auvray & Joel Rabinovich, 2019. "The financialisation–offshoring nexus and the capital accumulation of US non-financial firms," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(5), pages 1183-1218.
    13. Baines, Joseph, 2017. "Accumulating through Food Crisis? Farmers, Commodity Traders and the Distributional Politics of Financialization," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 24(3), pages 497-537.
    14. Carlos Aguiar de Medeiros & Nicholas Trebat, 2017. "Inequality and Income Distribution in Global Value Chains," Journal of Economic Issues, Taylor & Francis Journals, vol. 51(2), pages 401-408, April.
    15. Unknown, 2005. "Forward," 2005 Conference: Slovenia in the EU - Challenges for Agriculture, Food Science and Rural Affairs, November 10-11, 2005, Moravske Toplice, Slovenia 183804, Slovenian Association of Agricultural Economists (DAES).
    16. Working, Holbrook, 1960. "Speculation on Hedging Markets," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 1(2), pages 1-36.
    17. Jennifer Bair & Marion Werner, 2011. "Commodity Chains and the Uneven Geographies of Global Capitalism: A Disarticulations Perspective," Environment and Planning A, , vol. 43(5), pages 988-997, May.
    18. Jennifer Clapp & Eric Helleiner, 2012. "Troubled futures? The global food crisis and the politics of agricultural derivatives regulation," Review of International Political Economy, Taylor & Francis Journals, vol. 19(2), pages 181-207.
    19. Gibbon, Peter, 2001. "Upgrading Primary Production: A Global Commodity Chain Approach," World Development, Elsevier, vol. 29(2), pages 345-363, February.
    20. Pipkin, Seth & Fuentes, Alberto, 2017. "Spurred to Upgrade: A Review of Triggers and Consequences of Industrial Upgrading in the Global Value Chain Literature," World Development, Elsevier, vol. 98(C), pages 536-554.
    21. Jostein Hauge, 2020. "Industrial policy in the era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan," The World Economy, Wiley Blackwell, vol. 43(8), pages 2070-2092, August.
    22. Vicol, Mark & Neilson, Jeffrey & Hartatri, Diany Faila Sophia & Cooper, Peter, 2018. "Upgrading for whom? Relationship coffee, value chain interventions and rural development in Indonesia," World Development, Elsevier, vol. 110(C), pages 26-37.
    23. Joseph Baines, 2017. "Accumulating through food crisis? Farmers, commodity traders and the distributional politics of financialization," Review of International Political Economy, Taylor & Francis Journals, vol. 24(3), pages 497-537, May.
    24. Tania Salerno, 2014. "Capitalising on the financialisation of agriculture: Cargill’s land investment techniques in the Philippines," Third World Quarterly, Taylor & Francis Journals, vol. 35(9), pages 1709-1727, October.
    25. Gerald Epstein, 2019. "The Political Economy of Central Banking," Books, Edward Elgar Publishing, number 18820.
    26. Rossi, Arianna, 2013. "Does Economic Upgrading Lead to Social Upgrading in Global Production Networks? Evidence from Morocco," World Development, Elsevier, vol. 46(C), pages 223-233.
    27. Niels Fold & Marianne Nylandsted Larsen, 2011. "Upgrading of smallholder agro-food production in Africa: the role of lead firm strategies and new markets," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 4(1/2/3), pages 39-66.
    28. Machiko Nissanke, 2012. "Commodity Market Linkages in the Global Financial Crisis: Excess Volatility and Development Impacts," Journal of Development Studies, Taylor & Francis Journals, vol. 48(6), pages 732-750, June.
    29. Gereffi, Gary, 1999. "International trade and industrial upgrading in the apparel commodity chain," Journal of International Economics, Elsevier, vol. 48(1), pages 37-70, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cornelia Staritz & Bernhard Tröster & Jan Grumiller & Felix Maile, 2023. "Price-Setting Power in Global Value Chains: The Cases of Price Stabilisation in the Cocoa Sectors in Côte d’Ivoire and Ghana," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(4), pages 840-868, August.
    2. Tröster, Bernhard & Gunter, Ulrich, 2022. "Trading for speculators: The role of physical actors in the financialization of coffee, cocoa and cotton value chains," Working Papers 68, Austrian Foundation for Development Research (ÖFSE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pasquali, Giovanni & Krishnan, Aarti & Alford, Matthew, 2021. "Multichain strategies and economic upgrading in global value chains: Evidence from Kenyan horticulture," World Development, Elsevier, vol. 146(C).
    2. Xinyu Yang & Weidong Liu, 2022. "Agricultural Production Networks and Upgrading from a Global–Local Perspective: A Review," Land, MDPI, vol. 11(10), pages 1-14, October.
    3. Eunkyung Park & Martin Kang’ethe Gachukia, 0. "The Role of the Local Innovation System for Inclusive Upgrading in the Global Value Chain: The Case of KenyaGAP in the Kenyan Horticultural Sector," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 0, pages 1-26.
    4. Eunkyung Park & Martin Kang’ethe Gachukia, 2021. "The Role of the Local Innovation System for Inclusive Upgrading in the Global Value Chain: The Case of KenyaGAP in the Kenyan Horticultural Sector," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(3), pages 578-603, June.
    5. Vicol, Mark & Neilson, Jeffrey & Hartatri, Diany Faila Sophia & Cooper, Peter, 2018. "Upgrading for whom? Relationship coffee, value chain interventions and rural development in Indonesia," World Development, Elsevier, vol. 110(C), pages 26-37.
    6. Stefano Ponte, 2008. "Developing a ‘Vertical’ Dimension to Chronic Poverty Research: Some Lessons from Global Value Chain Analysis," Working Papers id:1743, eSocialSciences.
    7. Rory Horner, 2022. "Global value chains, import orientation, and the state: South Africa’s pharmaceutical industry," Journal of International Business Policy, Palgrave Macmillan, vol. 5(1), pages 68-87, March.
    8. Pipkin, Seth & Fuentes, Alberto, 2017. "Spurred to Upgrade: A Review of Triggers and Consequences of Industrial Upgrading in the Global Value Chain Literature," World Development, Elsevier, vol. 98(C), pages 536-554.
    9. Linqing Liu & Shiye Mei, 2016. "Visualizing the GVC research: a co-occurrence network based bibliometric analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 109(2), pages 953-977, November.
    10. repec:ipg:wpaper:2014-496 is not listed on IDEAS
    11. Baines, Joseph & Hager, Sandy Brian, 2021. "Commodity Traders in a Storm: Financialization, Corporate Power and Ecological Crisis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue Latest Ar.
    12. Yoruk, Deniz E., 2019. "Dynamics of firm-level upgrading and the role of learning in networks in emerging markets," Technological Forecasting and Social Change, Elsevier, vol. 145(C), pages 341-369.
    13. Choksy, Umair Shafi & Ayaz, Muhammad & Al-Tabbaa, Omar & Parast, Mahour, 2022. "Supplier resilience under the COVID-19 crisis in apparel global value chain (GVC): The role of GVC governance and supplier’s upgrading," Journal of Business Research, Elsevier, vol. 150(C), pages 249-267.
    14. Amy A. Quark, 2011. "Transnational Governance as Contested Institution-Building: China, Merchants, and Contract Rules in the Cotton Trade," Politics & Society, , vol. 39(1), pages 3-39, March.
    15. Yoshimichi Murakami & Keijiro Otsuka, 2020. "Governance, Information Spillovers, and Productivity of Local Firms: Toward an Integrated Approach to Foreign Direct Investment and Global Value Chains," The Developing Economies, Institute of Developing Economies, vol. 58(2), pages 134-174, June.
    16. Marion Werner & Jennifer Bair & Victor Ramiro Fernández, 2014. "Linking Up to Development? Global Value Chains and the Making of a Post-Washington Consensus," Development and Change, International Institute of Social Studies, vol. 45(6), pages 1219-1247, November.
    17. Tham, La Thi & Pretzsch, Jürgen & Darr, Dietrich, 2020. "Asian timber value chains- a systematic review and research agenda," Forest Policy and Economics, Elsevier, vol. 112(C).
    18. Jonathan Bashi Rudahindwa & Sophie van Huellen, 2020. "Regional developmentalism in West Africa: The case for commodity-based industrialisation through regional cooperation in the cocoa-chocolate sector," Working Papers 239, Department of Economics, SOAS University of London, UK.
    19. Lim, Guanie, 2016. "Value chain upgrading: Evidence from the Singaporean aquaculture industry," Marine Policy, Elsevier, vol. 63(C), pages 191-197.
    20. Busquet, Milande & Bosma, Niels & Hummels, Harry, 2021. "A multidimensional perspective on child labor in the value chain: The case of the cocoa value chain in West Africa," World Development, Elsevier, vol. 146(C).
    21. Matanda, Margaret Jekanyika & Freeman, Susan, 2009. "Effect of perceived environmental uncertainty on exporter-importer inter-organisational relationships and export performance improvement," International Business Review, Elsevier, vol. 18(1), pages 89-107, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:eurjdr:v:33:y:2021:i:2:d:10.1057_s41287-020-00351-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.