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Competitiveness and Technological Upgrading in Global Value Chains: Evidence from the Indonesian Electronics and Garment Sectors

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  • Yohanes Kadarusman
  • Khalid Nadvi

Abstract

Indonesia is a rapidly growing and internationally competitive economy that is well integrated into globalized production systems. The global value chain (GVC) model has proven to be a popular analytical framework to explain how global lead firms structure and organize global production through dispersed global suppliers. Indonesia's leading export sectors, garments and electronics, are well integrated into GVCs. Engagement in GVCs, often led by leading global brands, is seen as a basis for local producers to become globally competitive and to grow. It also comes with challenges-local producers must meet the demanding pressures from lead firms on prices, on-time delivery, product quality, and social, environmental and labour standards. The possibilities for local producers to learn, acquire new capabilities and upgrade to enhance their competitiveness are often conditioned by the nature of ties that they have with their global lead firms. Yet, this paper argues, the GVC model fails to recognize agency on the part of local firms in this learning process. Moreover, particular forms of governance arrangements within GVC ties can restrict the prospects for local producers to enhance capabilities and upgrade. Drawing on selected case study evidence from the Indonesian garments and electronics sectors, the paper explores the relationship between distinct types of GVC engagements and firm-level learning and upgrading, and considers how some GVC ties may restrict upgrading.

Suggested Citation

  • Yohanes Kadarusman & Khalid Nadvi, 2013. "Competitiveness and Technological Upgrading in Global Value Chains: Evidence from the Indonesian Electronics and Garment Sectors," European Planning Studies, Taylor & Francis Journals, vol. 21(7), pages 1007-1028, July.
    • Handle: RePEc:taf:eurpls:v:21:y:2013:i:7:p:1007-1028
    DOI: 10.1080/09654313.2013.733850
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    References listed on IDEAS

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    1. Michael Hobday, 1995. "Innovation In East Asia," Books, Edward Elgar Publishing, number 226.
    2. Prawiro, Radius, 1998. "Indonesia's Struggle for Economic Development: Pragmatism in Action," OUP Catalogue, Oxford University Press, number 9789835600531.
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    Cited by:

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    2. Bloomfield, Michael J., 2020. "South-South trade and sustainable development: The case of Ceylon tea," Ecological Economics, Elsevier, vol. 167(C).
    3. Zoo, Hanah & de Vries, Henk J. & Lee, Heejin, 2017. "Interplay of innovation and standardization: Exploring the relevance in developing countries," Technological Forecasting and Social Change, Elsevier, vol. 118(C), pages 334-348.
    4. He, Shaowei & Khan, Zaheer & Shenkar, Oded, 2018. "Subsidiary capability upgrading under emerging market acquirers," Journal of World Business, Elsevier, vol. 53(2), pages 248-262.
    5. Jun Jin & Zhengyi Zhang & Liying Wang, 2019. "From the Host to the Home Country, the International Upgradation of EMNEs in Sustainability Industries—The Case of a Chinese PV Company," Sustainability, MDPI, vol. 11(19), pages 1-19, September.
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    7. Iliopoulos, Panagiotis (Takis), 2022. "A quantitative analysis of governance structures in the world economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 599(C).
    8. Pham, Hanh Song Thi & Petersen, Bent, 2021. "The bargaining power, value capture, and export performance of Vietnamese manufacturers in global value chains," International Business Review, Elsevier, vol. 30(6).
    9. Linda Calabrese & Neil Balchin, 2022. "Foreign Investment and Upgrading in the Garment Sector in Africa and Asia," Global Policy, London School of Economics and Political Science, vol. 13(S1), pages 34-44, April.
    10. Ulrich Elmer Hansen & Padmasai Lakshmi Bhamidipati & Mathilde Brix Pedersen & Ivan Nygaard & Hope Nyambura Njoroge, 2023. "Linking business strategies with upgrading pathways in global value chains: Insights from the Kenyan solar market," Development Policy Review, Overseas Development Institute, vol. 41(2), March.
    11. Kiamehr, Mehdi, 2017. "Paths of technological capability building in complex capital goods: The case of hydro electricity generation systems in Iran," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 215-230.
    12. Chiu, Chung-Yueh & Lin, Chang-Ching & Yang, Chih-Hai, 2019. "Technological catching-up between two ASEAN members and China: A metafrontier approach," China Economic Review, Elsevier, vol. 54(C), pages 12-25.
    13. Enrico Fontana & Muhammad Atif & Huma Sarwar, 2024. "Pressures for sub‐supplier sustainability compliance: The importance of target markets in textile and garment supply chains," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 3794-3810, July.
    14. Valentina De Marchi & Elisa Giuliani & Roberta Rabellotti, 2018. "Do Global Value Chains Offer Developing Countries Learning and Innovation Opportunities?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(3), pages 389-407, July.

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