International trade and global production are increasingly organised into global production networks (GPN) in which transnational corporations split the production process and start producing on a global scale. The integration into and the improvement of the position in GPNs has become a significant policy goal in various national development strategies. In this context, the concept of “economic/industrial upgrading” describes the movement in GPN from lower to higher value-added activities, which is generally associated with a successful development path of enterprises and economies. Yet economic upgrading processes are contested and the high competitive pressure on suppliers as well as asymmetric market and power structures in GPNs make it difficult to achieve sustainable development effects. Public and in particular industrial policies play a vital role in enabling economic upgrading, structural change and greater development effects (see Private sector development and industrial policy).
From a development perspective it is of particular relevance, what effects the increasing integration into GPNs has on economic development, employment and poverty reduction in developing countries, how their position in the international trading system could be improved in a sustainable manner and what regulations, institutional contexts and national policies would be needed to do so.
With regard to this subject area, ÖFSE focuses on the following aspects:
- What opportunities do export-oriented development strategies offer for the economic development process of developing countries, particularly in Sub Saharan Africa?
- What policies are needed that would enable greater and more sustainable effects on development, economic upgrading, structural change, as well as employment and poverty reduction?
- What role does industrial policy play and how should industrial policy interventions within the context of GPNs be adapted?
- What opportunities do new end markets in emerging economies (south-south trade) and the production for local and regional markets offer in terms of presenting alternatives to export-oriented strategies?
- How can higher local value creation and the development of local and regional production networks (for instance from cotton to textile and then to clothing in Sub Saharan Africa) be facilitated?