Technological upgrading in global value chains and clusters and their contribution to sustaining economic growth in low and middle income economies

This paper begins with a discussion of the role played by upgrading in the promotion of sustainable growth. Upgrading is discussed in two different contexts, that of industrial clusters and that of global value chains (GVCs). Drawing on global and African experiences, the paper addresses the upgrading agenda required to enable dynamic clusters to meet both domestic needs and progressively also needs in external markets. In the discussion of value chains, the paper distinguishes between vertically specialised and additive GVCs and shows how the upgrading agenda necessarily varies between these two families of GVCs. The paper concludes by briefly discussing two issues. The first is to distinguish between the upgrading agenda which is essential for sustaining economic growth and that which addresses the inclusivity (and thus sustainability) of the growth path. The second addresses the circumstances in which it may be possible to pursue these varied upgrading strategies simultaneously.

JEL Classification: O10, O33, F14, F60

Keywords: Global Value Chains, Industrial Clusters, Upgrading, Africa, Additive Value Chains, Vertically Specialised Value Chains