Comparison of Upgrading in Global and National Value Chains

Lizbeth Navas-Aleman has completed her doctoral thesis ‘Opportunities and obstacles for industrial upgrading of Brazilian footwear and furniture firms: a comparison of global and national value chains’ (2006).

Lizbeth’s thesis analyses whether firms in the southern Brazilian clusters of the Sinos Valley (footwear) and the Serra Gaucha (furniture) show different patterns of industrial upgrading according to the governance patterns in the value chains they feed into: global and national value chains.

The ‘Learning by exporting’ paradigm suggests that, for developing coutries, exporting provides a superior way to upgrade. This might hold for product and process upgrading but recent dissenting research, indicates that functional upgrading (design, marketing and branding) might be hindered by exporting under certain conditions.

To investigate these issues, Lizbeth’s thesis combines quantitative and qualitative methods to conduct a systematic comparison of the different types of value chains and corresponding types of upgrading in the footwear and furniture clusters.

Firms in both clusters operate in value chains serving the US, European, Latin American and domestic markets. The governance in these chains varies from quasi-hierarchical to market-based. Firms operating in quasi-hierarchical value chains experience extensive product and process upgrading but very little functional upgrading. In contrast, functional upgrading for firms operating in market-based chains is high and process and product upgrading moderate. Functional upgrading capabilities are acquired in the national market and transferred to exporting activities.

However, many firms operate in several value chains simultaneously (‘multi-chain’) and are exposed to different patterns of governance and upgrading concurrently. Multi-chain firms show the highest attainment in all types of upgrading, indicating that this strategy might offer the best upgrading opportunities. Lizbeth’s thesis shows that the repositioning of clusters along the value chain is hindered by dominant quasi-hierarchical chain governance but there are opportunities for collective functional upgrading strategies.

Policy implications stress the importance of domestic markets for functional upgrading and the role of branding, marketing and design as ‘strategic options’ that may add value and decrease vulnerability of firms operating in global value chains.

Project details

start date
6 October 2003
end date
22 December 2006

About this project