Joining Global Production Networks: Experience and Prospects of India

Cross-border dispersion of different stages/slices of the production processes within vertically integrated global industries (‘global production sharing’) has been a key structural change in the global economy over the past four decades. This paper examines opportunities created by this phenomenon for developing countries for export expansion and India’s experience with exploiting these opportunities from a comparative East Asian perspective. The analysis reveals that India has so far failed fitting into global production networks in electronics and electrical goods, which have been the prime movers of export dynamism in China and the other high-performing East Asian countries. The findings of this study provide further support to the case made in a number of influential studies for completing the unfinished reform agenda, encompassing both trade and investment policy reforms and ‘behind-the-border’ reforms. Tightening behind the border discipline is much more important for linking India into global production networks than for the expansion of the standard labour intensive products and other conventional exports. There is also a strong case, based on the experiences in East Asia and elsewhere, for combining further reforms with a proactive investment promotion campaign to attract multinational enterprises (MNEs) engaged in global production networks.