Global Value Chain-Oriented Industrialization: Policies Revisited

Abstract

Industrial policies consist of a wide range of measures that seek to structurally guide an economy onto the next level of development. They can be formulated by the state or government to substantially transform the state of a non-existent, nascent or ailing industrial sector and, more broadly, an underdeveloped nation's economy towards a structure of production that offers better prospects for economic growth. Global value chains (GVCs) are coordinated by transnational corporations (TNCs), which constitute larger, internationalized firms, while small and medium-sized enterprises (SMEs) are generally scattered along the chain, filling in where they possess a comparative advantage. Though GVCs provide a landscape within which firms may thrive, the rewards are usually reaped by the larger firms at play. There is room, therefore, for industrial policies to address the status of SMEs in GVCs, facilitating their sustainable and profitable insertion without sufficiently interfering to negate the virtues of the free market.