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This chapter provides a new perspective on a longstanding debate concerning the development of contemporary capitalism: does globalization erode the influence of territorial institutions on economic organization? While the theory of institutional comparative advantage and the varieties of capitalism (VoC) approach more generally maintain that globalization is compatible with persistent institutional diversity, the global commodity/value chain (GCC/GVC) approach holds that the organization of production increasingly reflects governance logics that are industry specific and global in scope. In order to empirically evaluate these contending claims, This chapter first derives two sets of divergent hypotheses regarding the degree to which a particular dimension of economic organization — spatial fragmentation — varies by either institutional or industry type, and then conducts a longitudinal statistical analysis in which thi chapter compares rates of spatial fragmentation (measured as the ratio of imports to domestic value-added) across industries and varieties of capitalism. The results provide strong (but imperfect) evidence in support of the GCC/GVC approach insofar as relative rates of spatial fragmentation vary across industries in a manner consistent with industry-specific global governance models, while the observed variation between institutional types is not significantly larger than that within them. The chapter interprets these findings as evidence for the claim that, across different institutional contexts, firms in the manufacturing sector are participating in coordinated trade networks of the sort described in the global commodity/value chains literature. The conclusion charts a parallel path forward in calling for future research that draws on both the VoC and GCC/GVC approaches to understand how spatial fragmentation is occurring, especially at the level of inter-firm relations in particular institutional contexts.

In starting the account, this introductory chapter has three objectives. First, it establishes the key structural forces behind the emergence of global production networks (GPN) as an organizational phenomenon within the global economy over the past two decades or so. It then introduces the intellectual context in which the GPN framework first appeared in the early 2000s and distils its basic attributes in relation to cognate approaches such as global commodity chains and global value chains. The final section maps out the structure and arguments of the book, detailing how it seeks to develop an enhanced GPN theory—for which it uses ‘GPN 2.0’ as convenient shorthand—that builds upon, and significantly extends, existing work under this banner.

The chapter offers a critical analysis of the call for policy convergence in Competition Law. This merely emanates from the global business community and enables established Competition Law regimes, such as those of the United States and Europe, to influence the convergence point and take ownership of the process. This does not take into account the different patterns of diffusion of Competition Law and consequently the variety of Competition Law systems globally. The chapter castigates the lack of participation in this global deliberative space of emergent and developing economies and the inability of various affected interests, beyond global businesses and to a limited extent consumers, to be considered. Taking a participation-centered approach, the chapter argues that global antitrust governance should not aim to policy convergence as such, but to increasing levels of ‘total trust’. Establishing a BRICS Joint Research Platform in Competition Law could a first step in this process.

The objective of this chapter is to explore the genesis of special economic zones (SEZs) and outline their historical evolution. It also analyses changes in their structural, spatial, functional, and administrative dimensions. It shows how SEZs originated in developed countries, when they were developing, as part of their strategy to support the process of ongoing industrialization. Recognizing their potential, developing countries' governments have increasingly embraced them as part of their development strategy and experimented with particularly innovative features to use them effectively. As a result, SEZs evolved over time towards more comprehensive objectives, high-tech orientation and multi-sectors, multi-preferential policies, flexible locations, larger spatial dimensions, and more economic integration within the host economy, which calls for a better understanding of their role in economic development.

This chapter focuses on Global Value Chains (GVCs) in the manufacturing sector. It summarises the recent empirical work on the quantitative significance of GVCs within individual countries and from BRICS. It also discusses the developmental implications of host countries participating in GVCs, paying particular attention to long-term industrial capacity building and issues of upgrading within and between GVCs. The chapter argues that GVCs are not primarily a trade phenomenon and thus the dependence on trade data to estimate their importance can distort the developmental perspective. The chapter concludes that no obvious model of BRICS involvement with GVCs has emerged and shows that the empirical evidence and case study material indicate widely differing experiences.

After a period of rapid growth, developing countries often experience a slowdown in growth and productivity, falling into what has come to be known as the “‘middle-income trap.” Production chains in East Asia, North America, and Western Europe have imposed a new model of production. Participating in global value chains became a policy issue. Market friendly trade policies—be it multilateral reductions of tariff and non-tariff barriers or preferential trade agreements with selected economies—are an essential part of this model. The relationship between value chains and regional integration has gained momentum, partly because participation in value chains is identified as a source of competitiveness, much needed for economies facing the middle-income trap. The relationship between preferential trade and participation in value chains as a means to deal with the middle-income trap is the subject of this chapter.

Intertwined markets and disaggregated means of production give rise to new types of economic entities. Organized along global value chains, the relevance of state borders for the legal norms that apply to them are often reduced and new governance responses have emerged. Modern retail payment systems are an example of cross-border, network structures requiring both private (contractual) and public (regulatory) governance. The two main legal responses—private international law and harmonization—fail to deal effectively with coherence. Based in a principled regulatory approach which relies on public reason, megaregional trade and investment agreements such as TPP provide a route to effective transnational governance of global and regional value chains in this area.

This chapter looks at China's responsibility for climate change from the perspective of ‘sustainable consumption and production’ (SCP). The SCP approach is an integrative analytical perspective that captures the complex relationship between economic activity, human well-being, and environmental degradation. Drawing on the SCP perspective, the chapter discusses the responsibilities of a range of stakeholders in China's consumption-and-production systems that are connected through global value chains. It shows that attributing responsibility for China's growing impacts on global climate is a complex issue because responsibility should be shared between producers and consumers within China and in other countries. The chapter identifies opportunities for using the SCP approach to undertake ‘environmental leapfrogging’ in the areas of energy, industrial manufacturing, urban development, and consumer behaviour.

Chapter 7 addresses the use of cooperative strategies and organizations in the development of global value-adding chains and networks. These global networks comprise not only component manufacture, but also final assembly, marketing, distribution, and even knowledge-based activities such as research and development. These activities are located in many countries and regions, both industrialized and emerging. The chapter notes that transaction cost and resource-based theories and their derivative transaction value perspective offer theoretical support for why cooperative ventures are common in the “outsourcing” that is typical of global production networks. Network concepts help to explain the structuring of global production networks and of the individual transactions that comprise these networks. The chapter also discusses the work of Gereffi and others on global value chains which is particularly informative about cooperative governance types. Modular production models provide a mechanism to structure decentralized networks.

This chapter analyses the ways in which financialization has transformed the territorial and organizational dynamics of innovation in global value chains, by adopting a historical perspective and focusing on Grenoble, the main French cluster in microelectronics R&D. The analysis draws on the geography of domination and neo-Gramscian approaches to (re)problematize spatial and institutional change as a political struggle in global value chains. On the basis of thirty-five interviews conducted between 2007 and 2010, archival information and secondary data, the authors identify three distinct periods in the development of the Grenoble cluster in which the specific geographical boundaries, forms of innovation, and relationship to the local territory in which its activities were embedded differed.

This chapter introduces a new approach to better understand productivity and employment growth in the global economy. As production fragmentation takes place across borders, countries specialize in particular tasks within global value chains, such as R&D, logistics, manufacturing, and marketing activities. To understand the effects of this on domestic labour demand, one needs to model the full interactions between the various participants in production. The global value chain approach is introduced, and its usefulness is illustrated with a study of the value added distribution of German cars across countries and production factors. It is argued that further study of the substitution possibilities across workers of different types and countries, as well as between labour and (intangible) capital is needed.

This chapter completes the account of trajectories of globalization by examining patterns of structural transformation and how these cumulatively led individual Central and Eastern European economies towards new international roles in world market integration during the 2000s. Over time, legacy factors matter increasingly less while the politics of adjustment came to matter much more. The chapter uses comparative data to trace patterns of structural transformation leading states to adopt one of the three distinct roles in international market integration: assembly platform, intermediate producer, and combined. The chapter defines the international market integration of small, developing states in a globalized economy as the structural position the nation’s industry assumes within global production networks. The concept incorporates both the aggregate role a nation’s industry holds in global value chains and the associated (national) political economy or institutional framework within which the organization of industrial activity takes place.

This chapter presents an abbreviated (modern) history of outsourcing, from the identification of the so-called new international division of labor in the 1970s, through the ascendancy of outsourcing as an innovatory business practice from the late 1980s and through the 1990s, to the rancorous “offshoring” debates of the last decade. Chapter 2 provides a genealogical and political-economic commentary on the rise of global outsourcing, from an epiphenomenon of the crisis of competitiveness facing some of the major manufacturing firms of North America and Western Europe in the 1970s, through the digital revolutions of the 1990s and the opening up of white-collar outsourcing markets, to the construction of the contemporary outsourcing “industry,” with its peculiar mix of strong growth, corporate regularization, political stigmatization, and second-class status.

This chapter explains the effectiveness of policy implementation and the varied capabilities of local governments, using policy tools to generate firm-level upgrading incentives. Using China’s largest manufacturing industry—the electronics industry—as an example, the chapter compares the development of China’s two largest manufacturing cities, Suzhou and Shenzhen. It demonstrates how earlier patterns of FDI attraction and the prioritization of large or small FIEs gave rise to distinctive foreign–domestic firm relations. Through both in-depth case studies and hierarchical models, the chapter shows that a segregated relationship started by the group-offshoring strategy of large FIEs makes upgrading policies, such as government funding and tax cuts, less effective and dampens the innovation incentives for domestic private firms. By contrast, a more equal, broadly connected relationship started by the subcontracting strategy of small FIEs makes upgrading policies more likely to generate firm-level innovation behavior.

Chapter 4 provides a history and analysis of development trajectories in the global clothing industry. Trade liberalization (specifically the end of import quotas from January 2005) and the rise of global value chains have changed the nature of the global economy since Lewis’s time. We use UNIDO data on remuneration, output, and employment to identify post-2004 national development trajectories showing that upgrading trajectories can be pro-labour (a rising wage share of value-added) or pro-capital (a rising profit share). Pro-labour trajectories can deliver rising average wages and employment (e.g. India and China) or higher average wages for fewer workers (e.g. Sri Lanka). Pro-capital trajectories can also deliver higher average wages and employment growth (e.g. Vietnam) or rising wages for fewer workers (e.g. South Africa). Downgrading trajectories are typically associated with falling average wages but can be associated with rising average wages (as in Turkey). The desirability of a particular development trajectory depends on the economic context, especially labour market conditions.