Harnessing Global Value Chains for Regional Development

Abstract

For about two decades now, global value chains (GVCs) have been an essential analytical tool for scholars and policy makers. A new book by Riccardo Crescenzi and Oliver Harman presents the topic to practitioners, focusing on how foreign direct investment (FDI) shapes regional development. In a time of heated debates about deglobaliza-tion and reshoring, the book is marked by a very welcome optimistic perspective on integration into global markets. It shows that connectivity is vital for regions to diversify and grow their economies. Corporations and skills from abroad have to be embraced. The book consists of fi ve main chapters. The fi rst explains why GVCs matter for regional development. The segmentation of production activities across the globe implies that a region ’ s competitiveness is about speci fi c tasks performed by local suppliers, not the performance of entire sectors. After linking to GVCs, these suppliers must upgrade to increase their value capture. The chapter also introduces key features of GVC analysis: the four dimensions of these networks initially described by Gary Geref fi , the fi ve types of governance, and the distinct forms of upgrading. The next three chapters go into details on upgrading. They shed light on how FDI builds the regional legs of GVCs. Green fi eld investment, mergers and acquisitions, as well as their drivers are addressed. The embedding of regions in GVCs is discussed. In this regard, learning and upgrading are crucial. Regions ought to attract FDI, fi rst in resource extraction or basic manufacturing, and then bene fi t from further FDI in knowledge-intensive activities carried out by the investors and their local partners. These outside-in connections are complemented by inside-out networks. The book furthermore covers how GVCs are re-shaped by FDI. Regional institutions must create a business environment conducive to a desirable manner of integration into GVCs. Strategic decision making — based on the genuine demands of local fi rms and in re fl ection of competitive advantages — is decisive. The book concludes with a short chapter on the