How does insertion in global value chains affect upgrading in industrial clusters?

TLDR

Industrial clusters depend on inter‑firm cooperation and local institutions for upgrading, while global value chains shape opportunities through buyers and governance. The study investigates how different modes of cluster insertion into global value chains influence the feasibility of local upgrading strategies. The analysis focuses on developing‑country firms that sell to large global buyers. The findings show that the way clusters are inserted into global value chains determines whether local upgrading is enabled or disabled. Keywords: clusters, value chains, competitiveness, upgrading, developing countries.

Abstract

Abstract Humphrey J. and Schmitz H. (2002) How does insertion in global value chains affect upgrading in industrial clusters?, Reg. Studies 36, 1017–1027. What is the scope for local upgrading strategies where producers operate in global value chains? The literature on industrial clusters emphasizes the role of inter-firm co-operation and local institutions in enabling upgrading. The value chain literature focuses on the role of global buyers and chain governance in defining upgrading opportunities. This paper argues that clusters are inserted into global value chains in different ways, and that this has consequences for enabling or disabling local-level upgrading efforts. It pays particular attention to the position of developing country firms selling to large, global buyers. Keywords: Clusters Value chains Competitiveness Upgrading Developing countries