Ch08_Regional Productive Networks

8/9/2019 Ch08_Regional Productive Networks

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Regional productive networks



Productive networks

• Global commodity chain (GCC)(developed primarily for the analysis ofindustrial commodities in the worldsystems tradition)

• Filière tradition (applied mostly toagricultural commodities originating fromformer French colonies)

• Global value chain (G C)



Commodity chains

• !" network of labour and production processeswhose end result is a finished commodity# ($opkinsand %allerstein (&' * &''+))

• Firms as either producers of inputs to others* orusers of inputs from others, -istinction between

producer-driven and buyer-driven GCCs• -uring e.pansionary phases* chains are

e.tended and become more vertically

integrated, /n phases of contraction* fiercercompetition weeds out the weaker firms andincreases concentration* while chains arevertically !dis0integrated#,



-imensions of GC1• 2he input-output structure• 2he geographical coverage• 2he governance structure• 2he institutional framework

• Conse3uences4Chain hierarchy* higher0skill and higher value0addedsections of the chain1etting up and maintaining production and trade

networksGCCs constitute the organi5ational basis of participationin world trade2he role of regional economies or local businesssystems



GCCs4 relevant analytical issues• Contractual linkages4 !out0sourcing# of previously integrated

components of 26C activities* contractual subordination ofsuppliers previously linked through !open0market# transactions,• 2he role of social and territorial capital• /n producer-driven GCCs , like the automobile and aircraft

industries* barriers to entry are located in large0scale* high0technology production facilities* involving heavy investmentand scale economies* so that manufacturers are the keyagents,

• Buyer-driven chains (consumer electronics* garments*footwear* toys* and fresh fruit and vegetables) have lowbarriers to entry in production* producers are subordinated tothe key agents controlling design and marketing* specificallythe control of international brand names and retailing* wherebarriers to entry are high and profits concentrated,

• Power involves the ability to out0source lower value0addedactivities and to retain or incorporate those with higher value0added,



Filière (or chain)

• "ctual commodity flows and agents and activities withinfilière * which is viewed as a physical flow chart ofcommodities and transformations, " product systemincludes enterprises producing and distributing theproduct in 3uestion* services regulating its trade*

marketing and consumption* and vertical and hori5ontalrelations between agents,• Concern4 $ow public institutions (e,g, marketing boards)

create a smooth flow of commodities* and how theyaffect local production systems,

• Product specificity/diversity is a variable independentlyaffecting organi5ational forms,

• Greater historical focus and depth than GCC approach,



G C4 analysis (&) and mapping• 2angible and intangible value0adding

activities• 7conomic and competitiveness issues 8

social and environmental dimensions (laborregulation issues* workforce development*greening of value chains* and gender,)

• pgrading! the dynamic movement withinthe value chain by e.amining howproducers shift between different stages ofthe chain,



9pgrading in the apparel value chain



G C4 analysis (:) and mapping• 2o what e.tent countries are involved in a

vertically fragmented production;2he vertical specialisation share ( 1) 4 the import contentof e.ports, 2he indicator measures the value of imported

inputs in the overall e.ports of a country (the remainderbeing the domestic content of e.ports),! 1&# share 4 the percentage of e.ported goods andservices used as imported inputs to produce othercountries# e.ports,

• For e.ample* the foreign content of 91 e.ports isabout &<= while 91 participation in G Cs risesto almost <>=,





"verage length of G Cs across all industries



GlobalD value chain





2he 6utella global value chain



2he 6utella global value chain• " famous ha5elnut and cocoa spread produced by Ferrero

/nternational 1" (/taly) where 6utella is in high demand (7urope* 6orth "merica* 1outh "merica and Aceania),

• 6ine factories 4 five are located in 7urope* one in Russia* onein 6orth "merica* two in 1outh "merica and one in "ustralia,

• 1ome inputs are locally supplied* for e.ample the packagingor some of the ingredients* like skimmed milk, Atheringredients are globally supplied4 ha5elnuts come from2urkey* palm oil from Ealaysia* cocoa from 6igeria* sugarmainly from ra5il (but also from 7urope) and the vanilla

flavour from China (the manufacturer of vanillin is a Frenchcompany that also produces in France),

• 6utella is then sold in < countries through sales offices ,



%eb references

• http4HHwww,clusterobservatory,eu• http4HHglobalvaluechains,org

• http4HHwww,capturingthegains,org• http4HHwww,cytoscape,org

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Ch08_Regional Productive Networks