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From Global Value Chains (GVC) to Innovation Systems for Local Value Chains and Knowledge
Keun Lee (Seoul National University)
XIV SOAS Industrial Development and Policy (IPD) Lecture
There is an emerging call for a need to integrate the two approaches, GVC and IS (innovation systems), with the recent initiatives by Lundvall (Lundvall, 2015, 2016). The current study can also be considered as an attempt to seek a linkage between the two approaches or integrating the two. The integration of the two approaches is important since just joining the GVC does not guarantee upgrading, and an economy might be stuck in low value activities, without functional upgrading. This paper thus proposes the In-out-and In again hypothesis that while at the initial stage of growth more GVC is desirable for learning from outside, functional upgrading requires some effort or stage of seeking separation and independence from the existing foreign-dominated GVC, and that the latecomer firms and economies might have to seek again for an opening to integrate back into the GVC after building up their own local value chains. This paper has tried to verify this ‘N-shaped, In-Out-In again’ hypothesis first by looking into cases of ‘upgrading’ in Korea, Brazil, and India, and second by checking the national level data of the share of domestic value-added (DVA). It is shown that the trends of FVA in successful catching-up economies are consistent with this In-Out-In again pattern. The paper also confirms some correlations between the degree of local creation and diffusion of knowledge and the values of DVA. This illustrates the linkage between the innovation system variables (knowledge localization) to the GVC variable of the DVA (1-FVA).
Keun Lee is the winner of the 2014 Schumpeter Prize for his monograph on Schumpeterian Analysis of Economic Catch-up (2013 Cambridge Univ. Press). He is now the President of the International Schumpeter Society, an editor of Research Policy, a council member of the World Economic Forum, and a member of the governing board of Globelics. He is a Professor of Economics at the Seoul National University.
Speaker(s): Keun Lee (Seoul National University), Antonio Andreoni (SOAS)
Event Date:
27 June 2017
Released by:
SOAS Economics Podcast
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Keun Lee (Seoul National University)
XIV SOAS Industrial Development and Policy (IPD) Lecture
There is an emerging call for a need to integrate the two approaches, GVC and IS (innovation systems), with the recent initiatives by Lundvall (Lundvall, 2015, 2016). The current study can also be considered as an attempt to seek a linkage between the two approaches or integrating the two. The integration of the two approaches is important since just joining the GVC does not guarantee upgrading, and an economy might be stuck in low value activities, without functional upgrading. This paper thus proposes the In-out-and In again hypothesis that while at the initial stage of growth more GVC is desirable for learning from outside, functional upgrading requires some effort or stage of seeking separation and independence from the existing foreign-dominated GVC, and that the latecomer firms and economies might have to seek again for an opening to integrate back into the GVC after building up their own local value chains. This paper has tried to verify this ‘N-shaped, In-Out-In again’ hypothesis first by looking into cases of ‘upgrading’ in Korea, Brazil, and India, and second by checking the national level data of the share of domestic value-added (DVA). It is shown that the trends of FVA in successful catching-up economies are consistent with this In-Out-In again pattern. The paper also confirms some correlations between the degree of local creation and diffusion of knowledge and the values of DVA. This illustrates the linkage between the innovation system variables (knowledge localization) to the GVC variable of the DVA (1-FVA).
Keun Lee is the winner of the 2014 Schumpeter Prize for his monograph on Schumpeterian Analysis of Economic Catch-up (2013 Cambridge Univ. Press). He is now the President of the International Schumpeter Society, an editor of Research Policy, a council member of the World Economic Forum, and a member of the governing board of Globelics. He is a Professor of Economics at the Seoul National University.
Speaker(s): Keun Lee (Seoul National University), Antonio Andreoni (SOAS)
Event Date:
27 June 2017
Released by:
SOAS Economics Podcast