Much of the current policy debate on fostering the industrial upgrading focuses on the importance of local or regional policy networks. The question, which has been neglected in this debate, is whether conducting local or regional industrial policy is possible where local enterprises are part of a global production system.
The ABC region of São Paulo provides a good opportunity for testing this proposition. Its two key sectors, auto and plastics, differ substantially in their involvement in the Regional Chamber, the most important public-private upgrading initiative launched in recent years. The paper shows how and why the very active participation of firms in the plastics chain contrasts with the passive attitude of firms in the auto chain. The main reason for this lack of interest can be found in the relationship of the auto-parts producer with their clients who are few in number and pursue global sourcing strategies. The pressures and the resources for upgrading come from within these hierarchical chains. In contrast, producers in the plastics chains have many clients and are therefore less dependent on specific vertical relationships. This has contributed to their greater reliance on collective efforts and greater involvement in the Regional Chamber.