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N

the degnaon eoyed and he reenaon o he aera n h ubcaon do no y he

exreon o any onon whaoever on he ar o he secreara o he Uned aon concernng

he ega au o any counry, errory, cy or area, or o auhore, or concernng he deaon

o roner or boundare.

sybo o Uned aon docuen are cooed o caa eer cobned wh gure. menon

o uch a ybo ndcae a reerence o a Uned aon docuen.

maera n h ubcaon ay be reey quoed or rerned, bu acknowedgeen requeed.

coy o he ubcaon conanng he quoaon or rern houd be en o he UCt ecreara

a: paa de aon, CH1211 Geneva 10, swzerand.

the vew exreed n h ubcaon are hoe o he auhor and do no neceary reec he

vew o he Uned aon secreara.

UCt/i//2009/5

Coyrgh Uned aon, 2010

rgh reerved

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Table of contentsAcknowledgements. vi

Preface. vii

Part.I. 1

inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

1. Theanalyticalframework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Characerc o Goba aue Chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

B aue ang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

C tye o ugradng n vaue chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

2. TheUNCTAD-OECD-UniversityofFribourgResearchProjectonGVCs. . . . . . . . . . . . . . .9

. the conex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

B. eearch ouu and ehodoogy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

C. nay o UCt cae ude . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

1. the auoove coonen ecor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

2. the oware ecor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3. the cnea and audovua ecor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3. Conclusionsandpolicyrecommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

. fndng o he reearch rojec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

B. pocy recoendaon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

1. sk deveoen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2. technoogca ugradng . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

3. Quay and andard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

4. tCsm nkage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

5. Cuer and errora deveoen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

6. ip roecon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

C. Concuon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Part.II . 29

4. Casestudiesintheautomotivecomponentssector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

. perecve on sm and Goba aue Chan exerence ro r

n KwaZuuaa provnce, souh rca . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

1. inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

2. the souh rcan auoove ecor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

3. fedwork ehodoogy and overvew o arcang r . . . . . . . . . . . . . . . . . . . . .32

4. warene and underandng o he Goba aue Chan . . . . . . . . . . . . . . . . . . . . . .34

5. Cooeraon whn he Goba aue Chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

6. ynac o he cooeraon, neecua roery, ae and coeence . . . . . .39

7. suor needed o enhance he roe o sm n he Goba aue Chan . . . . . . . . . .41

8. Concuon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

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B. eng he arcaon o doec sm n he nernaona roducon chan: he

cae o okwagen n mexco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

1. inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

2. eveong a uer nework or he auo ndury . . . . . . . . . . . . . . . . . . . . . . . . . . .46






8. Concuon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

5. Casestudiesinthesoftwaresector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

. goba oware ayer: he cae o mcroo n gy . . . . . . . . . . . . . . . . . . . . . . . . . .61

1. inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

2. the it ecor n gy and n mcroo goba uy chan . . . . . . . . . . . . . . . . . . .62



5. Cooeraon whn he Goba aue Chan and wh tC . . . . . . . . . . . . . . . . . . . . .69


7. Governena nave and uor needed o enhance he roe o sm

n he Goba aue Chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70

8. Concuon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

B. the roe o sm n he Goba aue Chan n he noraon and

councaon echnoogy ecor n e a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

1. inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

2. e a iCt ndury ouook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

3. iBm and Goba aue Chan n e a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77


5. Cooeraon and ye o nkage n Goba aue Chan . . . . . . . . . . . . . . . . . . . . . .81

6. the reevance o echnoogca k, andard and neecua roery rgh . . . .82

7. pocy nave and recoendaon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

6. Cae ude n he cnea and audovua ecor . . . . . . . . . . . . . . . . . . . . . . . . . . .85

. oec sm n he eevon Goba aue Chan: he cae o Caraco n Cooba .85

1. inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

2. Cooban eevon, t coerca and 3anaon arke n conex . . . . . . . .85

3. aue ang or 3anaon n Cooba . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87




7. ynac o cooeraon, neecua roery, ae and coeence . . . . . . . . .94

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9. Concuon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

B. eng he arcaon o doec sm n he nernaona roducon chan:

he cae o u mero n gera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

1. inroducon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

2. Genera overvew o he ndury n gera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

3. cae udy on u mero We rca . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102

4. oe o u mero n he Goba aue Chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103

5. warene and underandng o he Goba aue Chan . . . . . . . . . . . . . . . . . . . . .104

6. Cooeraon whn he Goba aue Chan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106

7. ynac o he cooeraon, neecua roery, ae and coeence . . . . .106

8. scoe or governen nervenon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

9. Concuon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108

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Acknowledgementsth ubcaon a conrbuon o he Coon on inveen, nerre and eveoen

o he ed o a and eduzed enerre (sm) rooon. i wa reared on he ba

o ecora cae ude underaken n a jon rojec nanced by he sw Governen hrough

he Geneva inernaona cadec ework (Gi) and jony carred ou by he Uned aon

Conerence on trade and eveoen (UCt), he rganzaon or conoc Cooeraon

and eveoen (C), and he Unvere o Geneva and frbourg. i ao draw on a goba

conerence organzed by he C n June 2007, and an nergovernena xer meeng hed by

UCt n oveber 2007.

UCt woud ke o graeuy acknowedge he Governen o swzerand or undng

he reearch hrough he Geneva inernaona cadec ework (Gi/UiG). UCt woud

ao ke o acknowedge he any conrbuon o a hoe who arcaed n h jon rojec,

ncudng mareforence , euy recor o he Cenre or nrereneurh, sm and

loca eveoen a he C; mararoa luna, senor cono a he C; proeor pau H.

ebnk, Unvery o frbourg; Joerg mayersaer, Unvery o uburg; proeor mke morrand Gen obbn, schoo o eveoen sude, Unvery o KwaZuuaa, urban, souh rca;

proeor Ceene uz uran, Unverdad aona unoa de mexco; tradeon Hano e

a; tarek aad, Genera manager, Ci Conung, gy; sacha fur, inernaona Bune

earen, fit Unvery, meden, Cooba and Kune a, geran Coyrgh Coon.

the ubcaon wa reared by an UCt ea cooed o forna mugone, fuva farne

and lorrane ung (conuan), under he eaderh o azha Benabbe taarjchenbrenner.

Jae Zhan rovded overa gudance and drecon. anea mcCarhy rovded edng and

deko ubhng uor.

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Prefacenry no Goba aue Chan aow a and eduzed enerre (sm) o arcae

n he goba econoy. mang Goba aue Chan how ha hee ay vary n her rucure and

n her oena o bene sm n deveong counre. Whe oe governen have oruaed

ndura oce and ay rooe ceran econoc ecor, hey have been e uorve o

sm, arcuary n enhancng her roe n he goba econoy. everhee, here growng

awarene o he conrbuon o sm o ncoe, eoyen and exor. nuber o nernaona

organzaon uch a he rganzaon or conoc Cooeraon and eveoen (C), he

inernaona labour rganzaon (il), he Uned aon Conerence on trade and eveoen

(UCt) and he Uned aon indura eveoen rganzaon (Ui) have underaken

reearch and hed exer eeng and nera conerence o hghgh sm conrbuon and

how governen can renghen sm uy caace.

th ubcaon a conrbuon o h eor. i ocue on wha governen houd do o

acae he enry o sm no Goba aue Chan and o enure ha hey bene ro uch

arcaon. C and UCt jony underook cae ude o dvere Goba aue Chan nhe auoove, cnea, cenc and recon nruen, oware and our ecor, n boh

deveoed and deveong counre. in arcuar, UCt deveoed x n deh cae ude,

conaned n par ii o h ubcaon, ocung on he auoove ecor, he oware ecor and he

cnea and audovua ecor. ee wde derence n her rucure, he nuence o he ead

r, he degree o sm ndeendence and her conrbuon o vaueadded, sm n hee Goba

aue Chan unanouy agreed ha here wa a roe or governen n wo crca area.

fr, governen houd do a beer job n oerng k deveoen. Goba vaue chan

requre ha sm be boh dynac and nnovave. th ean hey u be abe o hre quaed

worker wh he rgh k arcuary, he rgh hghy ecazed k. second, governen u

enabe sm o ee nernaona andard. Here governen need o uor he haronzaon o

dvere and burdenoe roduc and roce quay andard and ao degn nanca eaure

and nruen o aow sm o nve n connuou nnovaon and echnoogca ugradng.

i hoe ha h ubcaon w rae governen awarene o he need or eecve oce

and rograe ha can anan or ncreae sm aby o ener and bene ro her negraon

n Goba aue Chan.

suacha panchakd

Secretary-Generalof UnctaD

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1PART I

Introduction vaue chan decrbe he u range o acve hrough whch a good or a ervce ae

ro conceon o drbuon and beyond. th ncude evera acve uch a degn,

roducon, arkeng, drbuon and uor o he na conuer. hee acve can be

conaned whn a nge r or dvded aong deren enerre; hey can be conaned whn a

nge geograhca ocaon or read over wder area. Goba aue Chan (GC) a chan o

acve whch are dvded aong ue r n deren geograhca ocaon. GC cover a u

range o nerreaed roducon acve erored by r n deren geograhc ocaon o brng

ou a roduc or a ervce ro conceon o coee roducon and devery o na conuer

(UCt, 2006).

the acceeraon o gobazaon, aded by he rad deveoen n noraon and

councaon echnooge, roved ranor ace and ar reducon, reen oorune

and chaenge o a and eduzed enerre (sm). parcaon n GC can gve sm

he ooruny o aan nanca aby, ncreae roducvy and exand her arke. Cooeraon

whn a nework o urea and downrea arner can enhance a r au, noraon owand earnng obe; nroduce new bune racce and ore advanced echnoogy. n he

oher hand, sm nvoveen n vaue chan deand greaer anagera and nanca reource,

he aby o ee nernaona andard and he roecon o nhoue neecua roery. to ee

hee chaenge, even n deveoed counre sm need he uor o her governen (C,

2007).

the Coon on nerre, Bune facaon and eveoen requeed UCt o

exore how deveong counry sm coud be aed o beer negrae no Goba aue Chan,

hu enhancng her naona roducve caace. ccordngy, a jon rojec, nhancng he oe

o sm n Goba aue Chan wa underaken by UCt n cooeraon wh he C Workng

pary on sm and nrereneurh and wh sw arner a he Unvery o Geneva and he

Unvery o frbourg. the arcan carred ou a ere o cae ude whch exaned he roe

o sm n he GC o ve deren econoc ecor and how h roe coud be enhanced. thendng were dcued by exer durng he C Goba Conerence n tokyo (2007) and a he

UCt xer meeng on nhancng he parcaon o sa and meduszed nerre

n Goba aue Chan (2007). th ubcaon reen he x cae ude carred ou by UCt

n deveong counre n hree o he econoc ecor, naey auoove, cnea and oware,

and her ndng, arcuary he roe governen can ay.

the cae ude were eeced o cover deren regon and ecor whch were eher

eergng regon or a coeve ecor n eeced ho counre. for he udy, a queonnare

wa ued o caure noraon on he oowng ue:

zz the awarene or underandng o he GC;

zz Cooeraon and ye o nkage n GC;

zz the reevance o echnoogca k, andard and neecua roery rgh; and

zz the roe execed ro governen.

the objecve o h ubcaon are wood. the r objecve o brng ogeher n one ace

he ndng reang o GC n x deren deveong counre and how her nerna dynac

and how hee dynac nuence he uae bene o sm uer. the econd objecve

o reen o governen a e o eed ocy oon o a sm n deveong counre o

ener ore eay and o rea greaer bene n he GC. ecve governen nave requre

arnerh beween he ubc and rvae ecor. i hereore oran or governen o oen

a daogue wh ead r and he sm n he GC when oruang new oce.

par i rovde he anayca raework, ncudng he characerc o GC, vaue ang

and he ye o ugradng n vaue chan. i ao uarze he an ndng ro UCtcae ude, and draw u concuon and ocy recoendaon, onng orward ve oran

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2PART I

Integrating Developing Countries SMEs into Global Value ChainIntegrating Developing Countries SMEs into Global Value Chain

ue whch cae u durng a he reened cae ude. par ii hen reen he reu o

he cae ude underaken n he auoove coonen ecor or toyoa n souh rca and

okwagen n mxco. i anayze he sm roe n he GC o he oware ndury hrough he cae

ude carred ou or mcroo n gy and or iBm n e a. fnay, exane he roe o sm

n he goba eevon vaue chan o Caraco n Cooba and n he goba cnea roducon chan

o u mero n gera.

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3PART I

1 / The analytical framework

A. Characteristics.of.Global.Value.Chains

GC are an oran un o anay or underandng enerre coevene. the

acve aong GC ay nvove conce, degn, roducon, arkeng, drbuon, reang and

&, and hey gh even ncude wae anageen and recycng. eendng on he ndury

need, each nk o he chan eror an acvy, and deren r add vaue a each age o

he roducon or ervce roce. ew ranoraon, noraon and councaon echnooge

have drven down he co o acceng noraon and radng roduc and ervce and acae

he aa dvon o vaue chan. ccordngy, a ceran roducon roce can be ocaed n a

arcuar geograhca area becaue o he ocaon coeve advanage. ong he econoc

deernan rggerng he deveoen o GC n deveong counre, acce o naura reource

uch a o, nng and agrcuure roduc araoun. ddonay, evera owco ocaonhave negraed no GC n eeced abournenve ndure. in a, becaue o he oeon

o ceran ecazed k and raned huan reource, it r n inda, and eecronc r n

Chna, tawan provnce o Chna, maaya and sngaore have ucceuy negraed no GC.sary, bu o a eer exen, n lan erca he exence o a cuer o coeve uer

ade obe or doec uer o auoove ar and coonen n rgenna and Braz

and eecronc coonen n mexco o becoe rer uer n GC.

Goba vaue chan day deren or o coordnaon (or governance rucure). the

way n whch he acve n he chan are coordnaed vare conderaby, no ony beween chan

bu ao a deren on n he ae chan. GC can be buyer drven or roducer drven

(Gere, 1999). Buyer or roducer coordnae or conro he GC roce (box 1). many tC have

changed her roe ro beng goba roducer o becong goba buyer and goba coordnaor,

arcuary n he buyerdrven chan (Ui, 2001, UCt, Wi 2004, UCt, 2006a).

Box 1. Buyer- and producer-driven value chains

Producer-driven commodity chains are those in which large, usually transnational, manufacturers

play the central role in coordinating production networks (including their backward and forward

linkages). This is characteristic of capital- and technology-intensive industries such as automobiles,

aircrafts, computers, semiconductors, and heavy machinery. Buyer-driven commodity chains refer

to those industries in which large retailers, marketers, and branded manufacturers play the pivotal

role in setting up decentralized production networks in a variety of exporting countries, typically

located in the developing countries. This pattern of trade-led industrialization has become common

in labour-intensive consumer goods industries such as garments, footwear, toys, housewares,

consumer electronics, and a variety of handicrafts. Tiered networks of third world contractors thatmake finished goods for foreign buyers generally carry out production. The specifications are

supplied by the large retailers or marketers that order the goods.

Source: Gere, 1999.

ccordng o Huhrey (2003), [] arge rea and branded coane uch a ke and Ga

n cohng and oowear, and uerarke whn he ood ndury can exerce a decve nuence

over GC whou akng drec conro o arge ar o he roducon roce and aocaed

ogc. ue o he drbuon o uncon (&, roducon and arkeng) or roe aong deren

er o uer and drbuor, sm ro eeced deveong counre have anaged o bud

u coeve advanage, whch enabe he o coee ucceuy n goba arke. the

chaenge or sm o deerne how and where (n whch nche arke) o oon heeve o

a o be rea he bene o gobazaon. Wha hey need n order o creae coeve caabe he caacy o connuouy ugrade her k o a o ncreae her reurn.

PART I

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4PART I


in he a, coarave ude on he coevene o a gven ndury ocued aenon

eher on ndvdua r or on cuer, bu now acknowedged ha vaue chan reaonh ay

a decve roe and ha coevene doe no concern ony a nge r erorance bu he

enre chan. soe r ncreangy ead her bune arner urea and downrea n he

vaue chan. ther donance are ro ecc caabe, oy he caabe o nnovae, o

creae brand, or o coordnae he whoe roducon roce. th evden n echnoogcay rady

changng ndure uch a it and eecronc, where here a conan deand ro rannaona

cororaon (tC) ycay he ead r or sm uer o rove co, quay, devery and

adaaon o roducon rocee. n he oher hand, here ao a ervave reure on tC o

reduce he nuber o uer n he uy chan n order o ncreae eecvene n coordnaon.

suer o GC, and arcuary sm, can rk ong bune hey are enrey deenden on

one cuoer n he chan, or a drac a n deand occur n e o a cr (box 2).

Box 2. GVCs and SMEs during downturns

For domestic SMEs, the participation in a GVC brings many potential advantages, such as

transfer of know-how and technological upgrading, but it has also some downsides, mainly related

to the economic dependence and power imbalance that may characterize GVCs. Downsides areaggravated during economic crisis, when big retailers and large producers stop or drastically lower

their purchases, due to lack of demand, reduced access to finance, gloomy prospects and higher

risk aversion. There are dramatic drawbacks for SME suppliers that risk losing their business if they

are dependent only on one TNC customer. Thus, in a GVC, a crisis may lead to a domino effect:

when the main enterprise is facing difficulties, its first tier suppliers are strongly affected too, while

the second and third tier suppliers end up suffering from serious financial difficulties, threatening

their survival.

Evidence shows that the 2008-2009 financial and economic crisis has hit the hardest those

developing countries that are most dependent on external markets. This dependence can be

measured by the export-to-gross domestic product (GDP) ratio, which for all developing countries,

nearly doubled from 26per cent in 1995 to 51per cent in 2007, while for least developed countries

(LDCs) it increased from 17per cent to 45per cent over the same period (UNCTAD, 2009). This hasmade it essential for both developing and least developed countries to develop stimulus packages

to help boost the demand for domestic products, as well as to design strategies to reduce the

vulnerability of the economies to external shocks. In general, the anti-crisis packages governments

promoted are meant to address three main aspects: (i) stimulation of demand (ii) credit enhancement

measures and (iii) labour-market measures.

Additionally, some governments have introduced ad hoc measures to help the domestic SME

sector overcome the particularly difficult conditions brought about by the crisis. For example, the

Mexican Government initiated a public purchases programme, according to which at least 20 per

cent of the total of annual purchases of the Federal Government and its dependences will be bought

from domestic SMEs. It also put in place a Productive Chains Programme, to prevent Mexican

enterprises being dropped from GVCs because of their financial weakness. The South African

Government, on the other hand, introduced targeted measures to expedite payments related toall outstanding incentive claims and to all public procurements involving small domestic suppliers.

State- owned development finance institutions are also considering supporting SMEs through the

following measures: (i) distressed lending, (ii) subsidized lending, (iii) pre-and-post non- financial

support (OECD, 2009).

Overall, governments should balance specific measures responding to the pressures of the

present economic crisis with longer term plans for economic development and business support.

UNCTADs research highlighted for example that TNCs often take active steps to improve the

capabilities of their suppliers, but they seldom progress beyond the first tier, neglecting SME

suppliers in most developing countries. Therefore, in developing countries policies for suppliers

upgrading and TNC-SME linkages creation should focus on the integration of lower-tier suppliers in

GVCs (UNCTAD, 2007).

Source: UCt, 2007; UCt, 2009; C, 2009.

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5PART I

The analytical framework

B.Value.mappingseca conduc he anay o vaue chan by drawng a a whch rovde an uraon

o he ow o good and ervce whn he chan. mang can ao urae he reaonh

beween deren vaue chan. eendng uon he naure o he anay he ocu o vaue

ang ay core deren aec o he chan uch a r ze, vaue added, or geograhca

drbuon. in addon, ang very ueu n order o hghgh he reevan governance rucure

or a ecc vaue chan. mang a vaue chan uuay dvded no age. three exae

beow rovde an uraon o deren age o vaue chan ang n eeced ndure howng

her dvery and coexy.

Figure.1.Colombia..supply.chain.for.the.automotive.industry

Chassis

Steering,brakes andsuspension

Engine andlubrication

Transmissionand gearbox

Wheels, rimsand tyres

Body work

Firstassembly

UnitsCKD

Cars

Distribution

Otherbody work

Panes

Controlequipment

andinstrument

panels

Assembly line(welding, painting, assembling)

Interiorfinish

Airconditioning

AccessoriesPackagingand various

Electricalequipment

andinstallations

Source: earaeno acona de paneacn, 2005.

fr, neceary o draw an na a o he uy chan ncudng a acve and

roducon rocee carred ou ocay. fgure 1 how he vaue chan o he Cooban auoobe

ndury and gve oe na ndcaon o he oca uer ze and orance. the a grou

acve no deren chan nk, conng o reavey hoogenou roduc n er o her

echnca characerc o roducon uch a coon raw aera, neredae roduc or

roduc harng ar roducon echnooge. the a and reaed abe baed on a deaed

urvey rovde noraon on each egen conrbuon o vaue added, eoyen and exor.

ccordng o he urvey, n Cooba he o oran chan eeen o he auoove

ndury wh reec o job creaon are break, engne and eecrca equen. the arge

vaueadded conrbuon o he chan orgnae ro car aeby, whch generae abou 61 er

cen o he oa ouu vaue. the arge conrbuor o exor coe ro re and ranon

(earaeno acona de paneacn, 2005). the uy chan a, however, doe no rovde

noraon on he connecon o oca uer o goba roducer. ccordng o a recen anay

o he goba auoove ndury, here a argeed rerucurng aed a a conodaon o crca

echnoogy exere, roducon caabe and caa acce rovded by goba uer (Cenre

or uoove eearch, 2006). a nuber o goba uer deveo oca nework o

econd and hrder ubconracor, eadng o uy chan roveen and ugradng. they ac

a anchor coane and ye negraor, ayng an oran roe beween ndvdua vehce

anuacurer and a whoe nework o uer. for exae, here ay be anchor coaneha u ogeher ranon and drve ran and oher ha u ogeher engne coonen,

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6PART I


ue njecon u, engne eecronc, and exhau and eon conro. i hereore oran

o coee he noraon gahered ocay, ang he connecon beween oca Cooban

ubconracor and goba uer.

the econd age o vaue ang draw he oca uy chan connecon o acve

eewhere and her connecon o na arke. fgure 2 how, or exae, he rucure ohe reh vegeabe rade beween Kenya and he Uned Kngdo. Un he d1980, rade n

h ecor wa handed hrough a ere o arengh arke reaonh and here wa e

verca negraon. However, he h n he bune raege o uerarke baed n he Uned

Kngdo ranored he uy chan no a vercaynegraed rucure. the change were drven

by arke deand or reh vegeabe, quay andard (ncudng ao aey, envronena and

abour andard) and he rovon o a yeararound uy. hee deveoen requred gh

coordnaon and conro o he vaue chan (Gere e a., 2003).

Uned Kngdo uerarke deveoed coer reaonh wh Uned Kngdo orer

and rcan exorer and renghened her overa conro over he vaue chan by reguar onorng

(gure 2). more rgorou ncororaon requreen and andard or uer n he roduc chan

ed o a reducon o he nuber o uer and ugradng o he eeced arner. a drec

reu, he ake o ahoder ha radonay rereened he backbone o he Kenya exorhorcuure rade had decreaed gncany by he ae 1990.

Figure.2.Kenya-United.Kingdom.fresh.vegetable.value.chain

Arms- length market relationship

Vertical coordination, network relationship

Ownership, verticalintegration

Exportersown farms

SupermarketsImportersImportersLargeExporters

LargeExporters

Contractfarmers

Outgrowers

Independent

smallholders

SmallGrocers

WholesaleMarkets

ImportersSmall

ExportersCollectors

?

Growing Processing Export Import Distribution Retail

Source: Huhrey, 2003.

the hrd age ycay ncude he ang o a GC ncudng he ocaon, ye o acve,

and buyer and roducer reaonh. are a good exae o urae he dynac o

a buyerdrven vaue chan (gure 3). large coane ke ke, Ga or led inc. coordnae

and ay conro a decenrazed roducon nework, ycay ocaed n deveong counre. in

he aare ndury, he hyca roducon o good uuay earaed ro he degn and

arkeng, and drbuon. the aare vaue chan can be dvded no ve an ar: raw aera

uy, ncudng naura and ynhec bre; rovon o coonen, uch a he yarn and abrc

anuacured by exe coane; roducon nework ade u o garen acore, ncudng

her doec and overea ubconracor; exor channe eabhed by rade neredare;

and arkeng nework a he rea eve. soe chan n he exe and garen ecor are ruygoba, wh acve akng ace n any counre n deren ocaon. in he cae o garen,

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7PART I

The analytical framework

h ay ean ha degn ake ace n london, man, par, ew York or tokyo, abrc ourced

ro Chna, r and oher nu ay be ade n inda, and aeby ay ake ace n mauru

or oher owco ocaon. Gobay dered roducon requre very careu annng and

anageen. soe chan can be vercay negraed. for nance, a udy o he k ubecor n

thaand reveaed ha he odern tha k chan coned o a nge vercay negraed r ha

wa nvoved n a acve ro k wor reearch o reang he na roduc (Huhrey, 2003).

Figure.3.Global.value.chain.for.textile.and.apparel

Retail outlets

All retail outlets

Trading Companies

Overseasbuying offices

Brand-namedapparelcompanies

All retailoutlets

North America

Apparel manufacturers

Domestic andoverseassubcontractors

Asian garmentcontractors

Off-price, factoryoutlet, mail order,others

Discount chains

Mass merchandisechains

Specialtystores

Marketing networksExport networksProduction networks

Asia

Component networks

Cotton, wool,silk, etc

Oil, natural gas Syntheticfibres

Petrochemicals

Fabric(weaving,knitting,finishing)

Yarn(spinning)

Domestic andMexican/CaribbeanBasin subcontractors

United Statesgarmentfactories (designing,cutting, sewing,buttonholing, ironing)

Textile companies

Raw materialnetworks

Naturalfibres

Syntheticfibres

Source: Gere and meedovc, 2003.

C. ypes.of.upgrading.in.value.chains

the erorance roveen o a he r arcang n a GC requre change n he

naure and x o acve carred ou n each nk n he chan and he reaonh aong r.

thee change cover roce, roduc, uncona and chan ugradng.

Process.upgrading a a ncreang he ecency o nerna rocee. i ncude boh

rocee whn ndvdua nk n he chan (e.g. ncreaed nvenory urnover, ower cra) and

beween he nk n he chan (e.g. ore requen, aer and one devere). rca evdence

how a varey o reevan earnng rocee aong uer n GC (UCt, 2001). for

exae, he denaon o bune conce and andard uch a is 9000, is 14000,

good anuacurng racce (Gmp) and good agrcuura racce (Gp) aong r ervng

GC ha argey been rggered by a cobnaon o reure and uor ro he ead r.

succeu adoon o uch andard an oran ean o ndura ugradng, one ha n

ar roec r ro owerco coeor who are no abe o coy wh hee andard.

for exae, e ha heed oca uer n deveong counre o ee beer andard n

agrcuura roduce, oerng ranng and echnca aance n ed care, oharve racce,

orage and ranoraon.

Product.upgrading ncude he aby o roduce coonen or rea new or ore coeve

roduc deveoed by ead r. rbuona and aerae ervce are aong he acve

o requeny ranerred whn GC (e.g. auoobe deaer, ga aon, reauran chan,

rave agence, drug ore, and courer ervce). uourcng hee acve e conderabe

advanage or downrea arner, any becaue hey can rady cover exenve arke whe

nzng rk and nveen n drbuon channe. the oca drbuor hu bene ro he

ue o an eabhed brand nae, a roven bune conce and he raner o knowedge rohe brand owner. th greay reduce he rk o aure or he oca r, arcuary sm. However,

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8PART I


he oca arner rean hghy deenden on he brand owner. in oe cae, he oca sm

orced o ay ubana ee and royae or ung he arner brand nae and bune conce.

produc andard are ao ore and ore oen enorced hrough vaue chan reaon, gven ha

he na roducer or drbuor o he roduc hed accounabe or coance and hu ake a

rong nere n aurng coance a revou age o he vaueaddng roce.

Functional. upgrading eek o ncreae he vaue added by changng he x o acve

conduced whn he r (e.g. akng reonby or ouourcng accounng, ogc and quay

uncon) or ovng he ocu o acve o deren nk n he vaue chan (e.g. ro anuacurng

o degn). rgna brand anuacurer n he area o it and eecronc n a nuber o deveong

counre have been abe o eror coex uncon n GC becaue o he crca a o ked

enerre and huan reource n hee counre. for nance, Genera moor, HpCoaq,

ore, and sony have ouourced it ervce o Wro n inda; ly and GsK phara ouourced

haraceuca uncon o shahun Checa, inda; and Bhara forge, inda ha been erorng

engneerng or Caerar, fW (Chna), ford, meror, and toyoa (iBf, 2007). soe sm becae

goba uer or even tC n her own rgh hrough uncona ugradng n a GC (box 3).

Chain.upgrading creae oorune or uer ha have deveoed coeence andk o ove o a new vaue chan. for exae, r n tawan provnce o Chna graduay oved

ro he anuacure o ranor rado o cacuaor, o t, o couer onor, o ao and

now o Wp hone.

Box 3. ENGTEK Malaysia: From a backyard business to a global supplier

Eng Technology Holdings Bhd. (ENGTEK), which started as a Malaysian SME in 1974, is today

a global supplier for the computer hard disk drive and the semiconductor industries. The firm has

grown from a no-name SME to a high-precision manufacturer that supplies competitive, quality

value-added products and services to several large TNCs in the electronics industry. The company

grew up in a policy environment conducive to enterprise development. Under Malaysias Vendor

Development Programme, TNCs were encouraged to assist local suppliers to become competitive

at the global level. Thanks to this programme, ENGTEK has engaged in closely knit partnershipswith TNCs. For example, Intel provided financial as well as technical assistance needed for the

company to produce semi-automated wire bonders in 1981. With partners such as Advanced

Micro Devices, Bosch, Fujitsu, Hewlett Packard, Maxtor, Readrite and Seagate, ENGTEK has been

involved in designing products, bringing in its specific experience in product development and

gaining a competitive edge vis--vis potential competitors. As a first-tier supplier, ENGTEK has

been able to link up to the global production systems of its TNC clients, moving up the value chain

over time. The company later diversified its portfolio of partners and products to reduce risks. It

widened its range of products, for example from precision tools to the manufacturing of disk-drive

components. It developed its own technology for original equipment manufacturing and achieved

original design manufacturing capabilities, which further reduced its dependency on any particular

foreign affiliate. It has also invested abroad to improve its competitiveness.

Source: Word inveen eor, 2001, . 129130, and www.engek.co.

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9PART I

2 / The UNCTAD-OECD-University of

Fribourg Research Project on GVCs

A..he.context

hough evera aec o GC are now beer underood by ocyaker, noaby he key

drver and governance rucure, he ac on sm n boh deveoed and deveong counre

ha no ye been horoughy reearched. to hed gh on hee ue, a jon reearch rojec wa

conduced by he C Workng pary on sm and nrereneurh, UCt and he Unvery

o frbourg, ened nhancng he arcaon o sm no Goba aue Chan.1

the rojec key objecve wa o reen a e o ocy oon o a boh deveoed

and deveong counre n beer negrang her sm no he goba arke. the ocyrecoendaon rovded n he oowng chaer are drawn ro he tokyo con saeen

endored by C eber counre a he Goba Conerence on nhancng he oe o sm n

GC, tokyo, n may 2007. they are ao drawn ro a ere o cae ude carred ou by UCt

beween 2005 an 2007, anayng he oorune and conran acng he oca uer o tC

oerang n eeced ndure n deveong counre.

the ndng o he cae ude are ndury ecc a hey are nuenced by he ndury

rucure, he age o ndura deveoen and he rocureen raege o he ead r n

he ndury. thereore, hey canno be generazed. However, hey rovde ueu noraon abou

uer o rannaona cororaon (tC) n deveong counre and ndcaon o her need,

and ay hu he deny key oce or enhancng sm roe n GC.

B..Research.outputs.and.methodology.

the ouu o he jon reearch rojec coned n he denon o a heoreca raework, he

creaon o a cae udy eae, he ed reearch on he roe o sm n he GC o ve deren

econoc ecor (naey oware, auoobe, creave ndure, cenc recon nruen

and our) and how h roe coud be enhanced, and a na ynhe reor (C, 2007a). Whn

he rojec, UCt eccay deveoed x n deh enerre cae ude, conaned n par

ii o h ubcaon, ocung on he auoove ecor (.e. toyoa n souh rca, okwagen n

mexco and taa moor n inda), he oware ecor (.e. mcroo n gy and iBm n e a)

and he cnea and audovua ecor (.e. Caraco n Cooba and umero n gera).

vera, he rojec underook eveneen counry/ndury cae ude and x ndeh

enerre cae ude: he coane and ecor were eeced o cover deren regon and onhe ba ha hey were eher an eergng or coeve ecor n eeced ho counre.

to hed gh n he eeced ecor, daa were gahered ro wo an ource: rucured

nervew wh a ed nuber o arge enerre and her urea and downrea arner

or each eeced ndury; and counry ude conduced hrough ndeh nervew baed on a

queonnare wh a rereenave grou o sm n he eeced ndure ha excy or cy

ac a uer and/or drbuor n Goba aue Chan.

for he enerre cae ude, he queonnare reared wa ued o caure noraon on

he oowng core ue: (a) he awarene or underandng o GC; (b) cooeraon and ye o

nkage n GC; (c) he reevance o echnoogca k, andard and neecua roery rgh;

and (d) he roe execed ro governen. thee ue were covered hrough ndeh nervew

1 the Governen oswzerand hrough he Geneva inernaona cadec ework (Gi/UiG) unded he reearch.

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10PART I


wh 10 o 15 uer n each eeced tC. the cae ude were carred ou by reearcher ro

deren ye o nuon, naey nre, unvere, and reearch nue. ther ndng are

uarzed n he oowng econ.

C..Analysis.of.UNCADs.case.studies

1. Theautomotivecomponentssector

the auoove coonen ecor haed by he deveoen o GC. severa tC car

anuacurer ue sm n deveong counre a ource or auoove coonen. tC

car anuacurer gan acce o new arke, exng sm uer n deveong counre w

need o ada o he deand o he nernaona arge anuacurer. the overa rend n auoove

anuacurng one o conodaon. tC car anuacurer have gncany reduced he nuber

o uer n order o rove her coevene. they ncreangy rey on a ed nuber o

rer uer who are abe o rovde auo coonen on a goba cae a orgna equen

anuacurng (m) andard (UCt, 2001). h ourcng rend connue, r er uer

ncreae n cae and becoe tC n her own rgh (Jrgen, 2003). th change ha creaed a

new dynac n he ndury and aer oca uer are orced o ada.

the oowng econ uarze he hghgh o he cae ude or toyoa n souh rca

and okwagen n mexco.

South Africa

toyoa ha been souh rca arge vehce roducer or oe e, enjoyng reerena

acce o oca conuer hank o he exence o hgh or ar. er souh rca rade

berazaon rograe, whch acceeraed n 1994, a ore oen ocy envronen ough

o encourage exor. However, toyoa souh rca (ts) ony receny began o exore exor

oorune and joned toyoa manuacurng Cororaon goba ourcng ye. th h ha

aowed ts o ubanay ncreae roducon. ts eabhed a an o anuacure wo

ode, Hux and Coroa.

key aec o he rerucurng roce ha nvoved ncreang oca vaue added. he an

ha hed ro roducng even deren ode, a reavey ow voue, o eenay wo ode

a hgh voue, ha anaged, n oe area o he uy chan, o ecure greaer vaue added

due o he hghvoue coonen order. r aeed o growng eve o coeon, n oe

cae acaed by ts eekng new uer ha coud ee ore rngen echnoogy, nveen

and quay andard. mo r dened he o ubana coeve hrea cong ro

eher ored aernave or ro reocang rannaona uer or her aae ha owned

orgna roduc or roducon echnoogy. ven he wo rannaonaowned r reored ha wa

no uncoon or oeraon whn he ae grou, bu ocaed n deren ace, o coee or

uy conrac. in h conex, revou echnoogy agreeen have o reevance.

sm e ha governen houd ay ore aenon o k deveoen, graon ocy,

nveen ncenve, echnoogy deveoen and abour aw reor. the buk o he r

nervewed ao beeved ha he Governen houd uor nerr coaboraon. in arcuar

echan uch a he Bencharkng Cub, u n ace o renorce he urban uo Cuer

(C), coud be recaed.

Mexico

okwagen rereen he econdarge car anuacurer n mexco, oowng an.

ong he oca uer nervewed, no oca sm ha been abe o everage nk o GC

a a rngboard or own nernaonazaon. in ac, hee sm do no oe any ecc

coeve advanage n er o echnoogy. in addon, her aby o nance he nernaonazaon

roce very ed, a hey barey anage o underake he neceary ugradng n order o keeace wh he hgher deand o her cuoer. o a he bunee nervewed conred

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11PART I

The unctad-oecd-university of fribourg research project on gvcs

ha n mexco he coeon hgh due o he decenrazed oeraon chee o tC. large

r decared ha n o cae hey or nu ro abroad and add e vaue o her roduc

ocay. However, a ew o he, naey ft mexcana and Johnon Conro, argued ha hey he

her uer o ncreae he vaue added o oca nu.

in addon, oe tC enoned ha n order o he sm ncreae her arcaon n

GC, uor eaure have been added ncudng reearch ace, uor or cercaon,

cred nancng and ranng or exor deveoen. fnay, tC anager exreed arecaon

or he creaon o a new ndura ark n he vcny o he okwagen pueba an, a we a hree

oher ark eabhed n he nearby ae o taxcaa, where a arge nuber o doec uer

are ocaed. okwagen nework o uer n taxcaa encoae 56 econd and hrder

uer, o whch ore han ha are sm, eoyng ao 15,000 worker.

nFindings.from.the.case.studies

the cae ude revea ha any ndeenden oca uer have no anaged o eher

nk wh goba ourcng arner or ugrade her own caabe o reach m andard. Whe

h naby ha e oe oca sm behnd, oorune o becoe oca uer n econder ourcng have eerged. to eze hee oorune, oca uer need o reond o he

execaon o tC and her m arner n er o quay, uy and devery e. a

whoe, sm n he auoove coonen ndury need o connue o ugrade her oeraon o

anan coevene boh doecay and nernaonay.

the ead r exaned n he cae ude, toyoa and okwagen, work coey wh her

rer uer wh he conequence ha hee end u beng overy ecazed and deenden

on he ead r. okwagen rereen he econdarge car anuacurer n mexco whe toyoa

ha been souh rca arge vehce roducer or oe e, enjoyng reerena acce o oca

conuer hank o he exence o hgh or ar. Whe boh ead r have a handon

ocy or deand a coen o he toyoa way, auo coonen conue a a ar o

he na ae rce and he conrbuon o uer argna. everhee, n he word o one

uer: hey wan he degn and engneerng bran on a, no ju wordca coonen.thu, he rer uer u becoe oa ouon rovder. th requreen coud

exan he daceen o he doec r ro he rer by goba uer.

the handonocy exend ony o he rer uer and he econd and hrder

rean ou o he oo n er o noraon and raner o echnoogy. in mexco, or nance,

aong he oca uer nervewed no oca sm n he econd and hrder ha been abe o

everage nk o GC a a rngboard or own nernaonazaon.

suer n boh counre coaned ha her roe n GC wa urher ed by hree

acor: ack o aroraey ked abour, ack o nrarucure, arcuary road and eecrcy,

and ack o nance o ugrade oeraon o ee nernaona andard. in ac, hee sm do no

oe any ecc coeve advanage n er o echnoogy. in addon, her aby o nance

he nernaonazaon roce very ed, a hey barey anage o underake he neceary

ugradng o kee ace wh he hgher deand o her cuoer. o a he bunee

nervewed n mexco conred ha he coeon hgh due o he decenrazed oeraon

chee o tC ha decared ha n o cae hey or nu ro abroad, addng e vaue

o her roduc ocay.

2. Thesoftwaresector

soware encoae a va array o roduc and acaon. many oware roduc have

a very ow wegho vaue rao, whch aow he reavey eay goba reocaon o egen o he

roducon chan n deren ocaon. in addon, conro over echnca andard a crca acor

ha drve he deveoen o GC. leadng r can e andard whch can ock n cuoer

o her roduc ne. soware ao coey nked wh eecouncaon ervce, arcuarywh obe hone and wree. the oware ecor ade u o any sm wh a ew bg

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12PART I


ayer. thee sm, arcuary aru, ycay eoy e han 50 worker. the key acor or

aracng oregn drec nveen (fi) n he oware ecor are he ze o he doec arke,

he avaaby and caaby o he oo o ked worker, and he ye o exng oware cuer.

the oowng econ uarze he hghgh o he cae ude or mcroo n gy and

iBm n e a.

Egypt

in gy, he oware ndury ha ecazed n wo area: (a) r ha ranae andard

oware roduc o eadng brand no rabc, ncudng adang he uer nerace; and (b)

r ha oer a corehenve uor ackage o uer o andard oware n he regon. th

ncude no ony nroducng and ananng new oware generaon bu ao runnng ca cenre

ha uor uer o andard oware, n arcuar he mcroo roduc range. gy ha any

advanage a an ohore denaon. the counry n he ae e zone a uroe and boa

breoc eecouncaon wh eay acce o a very arge eecouncaon bandwdh

ha needed or ouourcng. sk are avaabe and abour co are coeve. in addon, he

oware deveoen arke n he mdde a growng very a. the arke arge enough owarran cuo acaon and rabc veron o ajor nernaona oware ackage or uer

n gy and o o he mdde a.

gy donae he regona arke. more han 80 er cen o oware deveoen n he

mdde a erored by gyan eher ro gy or baed n he Gu. Coeon aong

oca coane rong and drve a conan ugradng roce, whch ha uaey aowed

oe coane o aan he hghe eve o mcroo ye accredaon. the cae udy how

ha gyan arner have beneed ro her aocaon wh mcroo and hey have everaged

ha arnerh o ener he Gu arke. gyan uor arner are ao ervng mcroo

gobay. However, any gyan r ack he aury o coee gobay. Connued rogre

n oware echnoogy ha ao raed coex ubc ocy ue uch a acce o noraon,

naona overegny and ecury, aw enorceen and roecon o he rvae here. in addon,

he nervew hghghed he need o:

a. abh a rong educaon ye accoaned by

ongong vocaona ranng n he rvae ecor;

b. inae he budu o cuer hrough cence and echnoogy ark wh

coeve ax and nanca bene or a r, arge and a ake; and

c. Creae rong, ora nkage beween naona nnovaon and educaon

ye whn he counry and wh be racce nernaona nuon.

Viet Nam

in 2006 he e aee oware ndury had 720 enerre wh 25,000 worker. foregn

hardware roducer uuay have a ed aby o underand or ove oca uer robe. e

a wa n an exceen oon o reedy h decency. a reu he oware ecor growng

rady wh governen uor. e a eecouncaon ecor ha exerenced he ae

rae o growh n he word. the average annua growh rae o ce hone beween 2000 and 2005

wa 62.7 er cen. inrarucure reaonaby wedeveoed. saee and ber oc cabe aow

a connecon bu hgh rce and ack o ubc awarene her ue. in he eworked

eadne index, deveoed by he Word conoc foru, e a ranked 75h ou o 115.2

evdence o he Governen coen o it deveoen, ung exenvey. e

a wa ranked 105h ou o 191 n er o he Governen index. 3 e a ao a ajor

e or he anuacure o hardware. the hardware arke uch arger han oware arke;

he wo cobned were vaued a $1,400 on n 2005 (trade on Hano eor, . 21). ine

2 the index eaure a counry readne o jon n and bene ro he deveoen o iCt.3 the index eaure he coeence and readne o each counry n budng ecoerce baed on he deveoen o iCt

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13PART I


nveed $1 bon n a acory o aeby and e ch (tm). her tC ao have nveed n

oeraon n e a uch a saung, Hp, cer, Cowon and iBm.


Goba oware r are he ae growng n he word and oen he o dynac n er

o roduc and roce nnovaon. they ao rovde he eu or he growh o oher ecor.

ong deveong counre, he an exorer o hgh echnoogy and noraon roduc and

ervce are Braz, Chna, inda and mexco. gy and e a have he oena o jon hee

rank. the uaon o iCt uer wa ar n boh counre exaned n he cae ude. gy

and e a have houand o oware uer, oe o whch are arner wh eher mcroo

or iBm.

trannaona hardware roducer and couer ye roducer have been ouourcng

oware deveoen o deveong counre wh hghy quaed abour orce and roxy o

eergng arke. Boh iBm and mcroo have very rucured uer deveoen rograe

whch coner any bene. thee rograe are uch ore nene han he handonocy

een n he auoove ecor. parner receve ranng and raner o echnoogy. they ao havehe ooruny o becoe goba uer or a ea regona one. the cae udy how ha

gyan arner have beneed ro her aocaon wh mcroo and hey have everaged ha

arnerh o ener he Gu arke. gyan uor arner are ao ervng mcroo gobay.

in e a, a nuber o sm have becoe ar o iBm GC. ar o GC hey he

aunch and drbue roduc and rovde oow u ervce. in order o negrae uer no

GC, iBm ha deveoed a rograe caed parnerWord. i ha hree deren eve. he

hghe eve, preer arner can acce daa, creae rooa, engage n roduc deveoen,

oban cercaon, arcae n ranng and nework wh oher bune arner. the e

aee arner rovde her cen wh iBm oware ervce and ouon; hee ncude bank,

enerre and he Governen. her arner drbue hardware ncudng erver.

parcang n he tC GC enhance he rege and credby o he sm akng

eaer or he o exand. i ao ake connuou ugradng eaer a hey have acce o he

tC echnca a and ranng. thu, raner o echnoogy are ore key. However, nce hey

are eng or adang eabhed roduc and ervce, genune nnovaon n nancy.

Coeon aong oca coane n he oware ecor rong and drve a conan ugradng

roce, whch ha uaey aowed oe coane n gy o aan he hghe eve o

mcroo ye accredaon.

the Governen o gy and e a have been very uorve o h ecor n er o

havng exc it oce and nveng n it ark. sm have ao beneed ro he exanon

o he ber oc cabe ye. However, any r ack he aury o coee gobay. sm

coaned abou he ack o aroraey ked abour and he need o he sm o becoe

arnerh ready n er o roved anageen and echnca caabe hey were o

enhance her roe n GC.

3. Thecinemaandaudiovisualsector

the ajor udo n he creave ndury uaneouy engage n our dnc bune

uncon: nancng, roducng, drbung, and arkeng and adverng o her and eevon

ae. ee he donan oon o ajor Hoywood akng udo, any sm are

eena o he ndury oeraon, occuyng oran nche n he akng and drbuon

roce. fro o o boo, he roce conrac drven. thee conrac aow arge and a

enerre o nerac, uuay on a rojecbyrojec ba, and o o ou ex ante under noray

wedened age and condon.

the oowng econ uarze he hghgh o he cae ude or Caraco n Cooba andumero n gera.

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14PART I


Colombia

Cooba one o he oran uer o eenovea, a eevon ere ora ha ha

becoe ouar n any counre, no ony n lan erca. the ouary o hee oa oera

ha conrbued o he eergence o an audovua roducon ndury n Cooba ha generae

wha ha been dened a a hghy ohcaed deand (porer, 1990). Coane nervewed

n Cooba ndcaed ha deand condon ro oregn cuoer are ore rngen han oca

one, and ha here a rong rvary aong oca rovder. the reence o a ohcaed

deand an oran drver n he ugradng roce o Cooba vaue chan n audovua

roducon.

3 anaon roducer n Cooba ac a r or econder uer n he vaue chan.

they are rer uer n he cae o adverng agence and naona eevon channe, and

econder uer n he cae o oroducon r and naona roducer. 3anaon

r are uy ndeenden regardng her choce o her own uer and roducon rocee.

ny n one cae, a ajor Uned saebaed eevon channe recoended he ue o a uer

baed n Braz, bu wa a recoendaon raher han an obgaon.

the eve o neracon beween cen and 3 anaon roducer vare accordng o he

ye o cen. Cuer deveoen occurrng baed on nerr cooeraon and on geograhca

roxy. ong he key ocy ue dened by r nervewed are:

a. prooon o oca aen (o ranng or 3 anaon

rovded by rvae unvere and nuon, a ajor rercon

or aened eoe who canno aord hgh uon);

b. tax reducon or cred acaon or he acquon o echnoogy

(hardware and oware), nce her end roduc are exored;

c. leenng o va rercon oed becaue o ecury

ue, whch haer anager bune rave; and

d. facang eoyen o eorary oregn worker o bene ro her ecazed k.

Nigeria

sm are oran ayer n he geran roducon and drbuon ndure. the counry

he hrdarge roducer aer he Uned sae and inda, and he ecor donaed by

sm. the duon o dga and councaon echnooge n he 1990 ha accouned or a

growh. roxaey 30 new e are dued every week and an average e around 50,000

coe. h ove ay e evera hundred houand coe, a an average rce o $2 each, whch

aordabe or o geran and aow roducer o ake a good reurn on nveen. Curreny,

around 300 roducer reeae beween 1,000 and 1,500 ove er year. geran drecor are

known o ado new echnooge a oon a hey becoe avaabe a an aordabe rce.

the cae udy nvegae he geran branch o a souh rcan eda coany and he

eergence o a geran ove cuer caed oywood, whch draw on a nuber o nave

geran ove ar. the geran ove ndury caer rary o he oca arke, nce ove

are ho n deren oca anguage, bu ngheakng are becong ncreangy ouar.

move conen ncude oe o he uua ye, uch a roance, bu ao oe ore doyncrac,

uch a voodoo. the an drbuon channe are vdeocaee and vdeo C. more receny,

a souh rcan eda cororaon, whch hod he oca onooy or Hoywood ove, ha

enered he arke. i run he Hoywood ove on a a nuber o creen n hong a

and drbue he on . the geran Governen encourage h cororaon o uor

oca ove roducer. the coany nervew reveaed ha he oowng boeneck are hnderng

sm: (a) ack o undng; (b) ack o organzed ndury and bune aocaon; (c) nadequaek and ack o roeona; (d) ack o nrarucure; and (e) a weak drbuon ye.

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15PART I


pracy ao a concern. the Governen o gera ha coed o nuona renghenng

o neecua roery roecon. Key nave ncude ncreaed undng or organzaon uch

a he geran Coyrgh Coon, he aona f and deo Cenor Board, he aona

Broadcang Coon and he geran f Cororaon. the mner o inoraon and aona

renaon ha creaed a und or noncoerca . However, hee reavey recen nave

w ake e o deveo ove reu.


the eevon ndury ha undergone roound change on he drbuon de nce he 1980

wh he adven o aee and cabe eevon, whch acaed he roeraon o channe. th ha

awned nuerou oca rovder ha drbue he eda roduc. more receny, an oran

change wa he ove ro anaogue o dga ora n errera aee and cabe drbuon.

for eevon rovder, h boh a beng and a cure. Whe oer econoc advanage,

ao ead o an negraon o radona eevon drbuon channe wh ore recen channe

uch a he inerne.

ew echnooge have ao aowed he roducon o reac anaed ove, oenngnew oon or roducon and oroducon o convenona ove, or nance hrough he

cobnaon o huan acor and anaed cenery. th ha changed he rucure o he vaue

chan n cnea and t, and creaed oorune or new, ecazed enran.

the GC n h ecor are abour nenve a coared o eher he auoove or oware

ecor. Urea arcan are exreey ndeenden. However, wh he change n echnoogy

decrbed above, downrea acve uch a drbuon are eeng any new enran. tru

aong he arcan oran n a ecor where hor er conrac are he rue. such conrac

ao acae erce rce coeon. Whe oe Governen uch a gera have ared

vage, bac nrarucure ncudng eecrcy a bg robe. in Cooba he ecor, a he

enre econoy, uer ro he oca naby. suer n boh Cooba and gera ced he

ack o ked abour a a ng acor.

.

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17PART I

3 / Conclusions and policy

recommendations

A..Findings.of.the.research.project

the jon UCtCUnvery o frbourg reearch rojec rovded ueu ngh n

denyng rory area or governen nervenon. there are obace ha aec sm aby

o ener GC boh n deveoed and deveong counre. thee ncude: (a) he need o ugrade

echnoogy and nnovaon caacy; (b) he ack o adequae nance and huan caa or h

roce; (c) he naby o ee andard and cercaon requreen; (d) he necey o

beer anage neecua ae, ncudng he roecon o neecua roery rgh (ip) when

arorae; (e) he dcu barganng oon sm ace wh arge conracor; and () he need

or dvercaon o reduce deendence on one or a ew cuoer (C, 2007a). the abe

beow hghgh he ocy ue whch eerged ro he cae ude carred ou by UCt,

uarzed n he revou econ.

able.1.Survey.results:.key.issues.and.main.areas.for.policy.intervention

Key.issuesMain.areas.for.policy.intervention

Specific.examples.from.case.studies

lack oadequae kor sm

sk andhuan reourcedeveoen

Microsoft-.gyptsm have underned he need or a arger oo o quaed huanreource, requrng a ocued eor by he Governen n hghereducaon.

Caracol-Colombia

sm woud ke o have greaer rooon o oca aen ando receve uor n he rooon o ngh anguage k oacae coane nkage wh nernaona eevon channeand nework.

lowcoancewhnernaonaandard

technoogcaugradng

IBM-Viet.Namsm are concerned wh he ow eenaon o he noraonand councaon echnoogy (iCt) deveoen an.

oyota-South.Africasm are concerned abou her aby o ugrade and o deverroduc and roducon ye ha are n ne wh toyoaexecaon n er o quay, uy andard and deverye.

lack o quayaurance

Cercaonandard

Vokswagen-Mexicookwagen ong ncreangy rngen quay requreen.loca sm uer (eecay econd and hrd er) need uor

o ee goba quay andard.IBM-Viet.Namloca coane need o be cered o becoe r er uer.Governen uor needed o he econd er uer enerhe grou o r er.

scarcenegraono doecuer noGC

tC smnkage

Volkswagen-Mexico.sm woud ke o be rereened n he bargan.

Nu.Metro-Nigeriasm uer ro ack o bac nrarucure, whch ha ed o hghco o dong bune. prooon o fi, oca nveen and axbreak woud rove hee nancng dcue.

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18PART I


Key.issuesMain.areas.for.policy.intervention

Specific.examples.from.case.studies

few ocaeconocdeveoenbene

Cuer anderroradeveoen

oyota-South.Africasouh rca how ha ucceu reu can be obaned by

acng ocay and hnkng gobay, by deveong oca cueruch a he urban uoobe Cuer and eenngbencharkng exerce.

Volkswagen-Mexicoloca uer n mexco coud beer ace he reure ocoeon when ocaed n or n he neghborhood o ecorayecazed echnoogy ark.

inucen iproecon

ip roeconye

IBM-gyptthe genera bune envronen coud be roved by beerdevery o Governen ervce and enurng he enorceen oip.

Nu.Metro-Nigeriasm woud ke o ee greaer eor o rove he reguaoryenvronen, n arcuar by ore eecve eenaon o heaw roecng neecua roery.

vera, he reearch rojec howed ha an enabng bune envronen a neceary

condon or roong sm o negrae no he goba arke (C, 2007a). avourabe bune

envronen deend on abe acroeconoc oce and wedegned coeenary oce

n area uch a coeon, nernaona rade and nveen, nance, abour and educaon,

ncudng huan reource caacybudng or nernaonazaon. the reearch ao hghghed

he need or a coordnaed aroach by he deren nuon drecy nvoved n budng he

enabng envronen avourabe o he negraon o sm n GC. for ocyaker, GC creae

a varey o chaenge, and due o her naure and conguraon, no nge nry can ake charge

o acang he negraon o sm no GC. foruang and eenng uor rograe

neceary nvove coordnaon beween deren nre, and a coe coaboraon wh he rvaeecor and cv ocey.

the ranaren and equabe acaon o aw and reguaon ogeher wh reaned and

abe adnrave rocedure ao rereen an oran ar, encoang bankrucy aw,

roery rgh, he ax ye, he cence and er ye, andard coance cercaon

rocedure and ecen due eeen rocedure (C, 2007a). However, here ao a

need or governen, he bune couny and nernaona organzaon o ay a roe n

degnng and eenng argeed aance rograe o bud caacy n sm, o ha

hey can overcoe he chaenge o enerng or ugradng her oon n he GC. the oowng

econ urae he an area o ocy nervenon ha ay ay o GC deveoen nave.

the oowng econ revew he an coonen o uer deveoen rograe and ocy

eaure ha Governen can ake o he sm beer negrae no GC.

B.Policy.recommendations

1. Skillsdevelopment

ne oran ue whch donae o o he cae ude he ack o adequae k n

he workorce o he sm n he GC. for a ecor uch a 3 anaon n Cooba h no

urrng, nce he ecor and underyng echnoogy are ony eergng. Wha enoned n o

o he cae ude, however, he deayed and nadequae reone o ubc ranng nuon

o new k requreen and n oe cae even o bac k need. the ocy caon o

he cae ude n er o k deveoen are no cear cu, a hey deend on he au o

he uer a we a he ndury n whch hey are oerang. in h reec, our deren GC

cenaro can occur, a abe 2 urae, whch correond o our deren rore n er o heocy eaure o be u n ace.

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19PART I

Conclusions and policy recommendations

able.2.Skills.upgrading.in.four.different.GVCs.scenarios

GVC-integrated.companies

maure +decnng

ndury

(1) suorng coaneunder reure

(3) facang eergngndure ergng +

growng

ndury(2) Ugradng owcouer n aure ndure (4) Creang advanced andecazed acor

Coane ha are no conneced o GC

Source: daed ro meyersaer (2007).

the cae udy o car ar uer n souh rca urae he need or supporting.

companies. under. constant. pressure, n a aure gobazed ndury, o connuouy ugrade

whe a he ae e reducng her na rce. in h conex, coane ace he chaenge o

eher eeng he ubana co and rk o he nernaonazaon roce or beng reegaed o

he roe o econd or hrder uer. to uor sm ha ace uch chaenge, governen

houd enure ha adequae ranng ace ex. sk deveoen cenre ha are exbe and

reonve o he changng need requre uor o rovde sm eoyee he addona k o

erve he goba arke. in h reec, he souh rcan aroach an exae o be racce n

reondng o he need o sm ha conany need o ugrade her worker k (box 4).

Box 4. The creation of sectoral training authorities in South Africa

In 2004 the South African Government re-launched the Sectoral Training Authorities (SETAs),

a system meant to accredit training providers and their curricula, thus guaranteeing an adequate

quality level. Each employer has to contribute to a sectoral training fund and can draw on this fund

to pay for training courses. SETA represents an effort to create a skills development system that in

principle is market-friendly and meant to respond to constantly evolving needs. Since the system

depends neither exclusively or primarily on public sector training institutions, nor on government

funding for training expenses, it has proven relatively robust against fluctuations in government

budget allocations. However, companies revealed that it is a system that so far is not yet quite as

agile and responsive as the business sector would like it to be.Source: meyersaer (2007).

the cae udy on car ar uer n mexco on o he need or upgrading. low-cost.

suppliers.in.mature.industries, when an ndury ove ro he growh age o he aury age

and uer n he eabhed ocaon ar o uer ro a varey o co dadvanage. snce

buyer ar o ook or uer wh a ore avourabe co rucure, an ugradng eor ha a

a keeng doec sm on he radar creen o goba buyer u be baed on he execaon

and deand o buyer, a we a on he rce rucure o he sm coeor. the an

chaenge o u n ace onhejob ranng rograe or unked worker n eca ndura

zone uch a he aqua and rovde a oo o uceny ked worker who are wng o work

a coeve wage.

in vew o facilitating. emerging. industries, ocy aker houd nerac coey wh ead

coane and oca enrereneur o creae an enabng envronen or aru and new

econoc acve. the deand on ocy aker n er o exby, agy and reonvene

are ubana. for exae, he oware ecor n gy conneced o a GC, hough rary

a he downrea eve, adang exng oware ackage or he regona arke. the chaenge

or gyan coane o ener oher egen o he oware vaue chan, where, a he indan

exerence how, a uch bgger oena or job creaon and exor earnng ex. for he

gyan Governen, an ooruny ex o urher rove he educaon ye n er o agy

and reonvene, o acke he erou k horage aecng he ndury.

urng he evouon o a new ecor, vruou crce are generaed, uch a n he Cooban

3 anaon cae, where rvae raner are arng o rovde ecazed and ohcaed

ranng roduc. Governen are crca n creating. advanced. and. specialized. skills aohrough deonraon eec, bu hey u be careu no o dor he arke and daage he

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20PART I


nerna dyna o he rvae ecor. for exae, he aona Unvery o Cooba receny

oered he r ograduae rograe n anaon n he counry, and nce hen a rend oward

an ncreaed oer o 3 anaon rvae ranng coure ook ace. indeed, n Cooba a

cear ooruny ex o boo he growh o an eergng ecor, hu urher everagng rong

oon n he sanheakng audovua arke. in h reec, any r ee proexor he

naona rade and nveen rooon agency a he key nuon o rooe and oon he

Cooban 3 anaon bune n nernaona arke, hrough radear arcaon and he

organzaon o nduryecc even o rooe oca aen.

2. Technologicalupgrading

he cae ude conred ha o ener and rean n a GC neceary o engage n

connuou echnoogca ugradng n order o ee coany and nernaona andard. Uaey,

he an rgger o nnovaon n sm he oregn buyer or he ead r n he GC, whch deand

conan nnovaon ro uer ha wan o rean n he GC. moreover, he ead r w ao

ndcae he overa drecon o he nnovaon eor, boh n roce and roduc nnovaon. the

o oran acon a governen can ake o uor sm o ee hee requreen he

granng o nanca ncenve o ha sm can nve n arorae echnoogy. srenghenng ohe naona nnovaon ye a a oca, regona and ecora eve can he sm o deveo her

& caacy. the acve roe ayed by he gyan Governen n he counry rad iCt growh

an nereng cae (box 5).

Box 5. Government initiatives to support the ICT sector in Egypt

The Ministry of Communication and Information Technology (MCIT) has actively supported the

ICT industry through various initiatives:

(a) High Tech Business Parks (The Smart Village) have been established to provide enterprises

with world class infrastructures at a very reasonable cost.

(b) Subsidies up to $68 million are currently available to support training, marketing and

technological development.(c) Partnerships have been made with major ICT firms such as Siemens, Alcatel and Cisco to

train ICT engineering graduates.

(d) Specific initiatives to make PCs available at a reasonable cost were undertaken (a PC for

every student, household and teacher, etc.).

(e) The Free Internet initiative to offer Egyptian users dial-up services to the Internet at the

same cost as a local phone call (through a revenue-sharing agreement between Egyptian

Internet Service Providers and Telecom Egypt).

Source: UCt cae udy by ad (2007).

the tokyo con saeen (C, 2007b) rovde oe racca eaure o rooe he

caacy or nnovaon by oca sm. thee ncude:

zz abhng ogc echnoogy cenre a deonraon and eng ace o acceerae

he roou o uychan anageen echnooge and rocee, ncudng he ue o

eecronc ag or creang a eae drbuon nework;

zz facang he echnoogca ugradng o roduc and rocee hrough rovdng

acce o noraon on word be echnooge and rocee, and varou nanca

uor eaure; and

zz proong arnerh beween sm and organzaon overea ha can deveo or

raner wordeadng echnoogy, roduc, rocee or anageen racce.

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21PART I


3. Qualityandstandards

noher ue ha hghy reevan n he conex o GC coance wh nernaona

andard. th coey nked o and deend uon he sm aby o ugrade echnoogy.

Coance ncude boh roduc and roce quay andard. Coance wh roducandard can be vered by eng he roduc, whe coance wh roce andard requre

reguar aud o he roducon acy and uuay nked o roce cercaon (e.g. is 9000).

soe year ago, here wa an execaon ha generc andard uch a is 9000 gh be

ucen o guaranee conen quay, bu h roved no o be he cae. lead r have ao

been ung a nuber o dvere roreary roce andard or nduryecc andard. for

sm, he co o coyng wh any deren andard, n arcuar regardng rearaon or

cercaon, can be ubana and oee unaordabe and a barrer o he enry no a GC.

in advanced ndurazed counre, eaborae ye o quay aurance, cercaon and

accredaon have exed or a ong e, and he co reaed o h reavey nor. Cercaon

an ue whch uuay e o echnca eca and he roce rarey erceved a a raegc

varabe. for nance, cabraon o coon eaureen devce conduced by ecazed

rovder ha oerae n a coeve arke where rce are ow, oen e han $100 or an

annua cabraon. lkewe, nuerou rovder coee n he arke or cercaon o quay

anageen ye, and he co o cercaon ed o a ew houand doar n he cae o

is 9000.

in any deveong counre, he uaon que deren. muayered cercaon,

accredaon and cabraon ye are ony eergng. thee ecazed ervce are oered by

onooy rovder a hgh co. a conequence, oe deveong counre have aunched

eor o deveo her naona ye or cercaon, accredaon and cabraon.

Wha aarng, hough, ha any counre have no ye eened a ocy regardng

andard, eroogy and cercaon. th eave coane n deveong counre no oon buo rey on coy exer and cercaon nue baed n ndurazed counre (box 6).

Box 6. Reaching quality standards through international bodies in Mexico

The case of Volkswagen in Mexico shows that TNCs may be a key driver of technological

development and quality upgrading. For example, in Puebla, Volkswagen imposed higher

environmental standards and asked all its suppliers to become certified as clean plants by SGS

European Quality Certification Institute. This has allowed the development of new standards for the

Mexican industry, which then started to serve the United States market. Quality improvement also

had positive side effects on overall exports, since the number of defects in production was reduced

thanks to quality certifications (ISO 9000, 2000, ISO/TS 16949, 2002). Volkswagen was able to

produce more sophisticated export models in Mexico.

Source: UCt cae udy, by uz uran (2006).

in h conex, governen houd ocu on creang a reguaory raework ha encourage

he eergence o coerca rovder who oerae n coeve arke and hu drve down he

rce o cercaon ervce. the tokyo con saeen (C, 2007b) rooed ha governen

houd a oca uer o ee nernaona quay andard by:

zz rovdng noraon and roeona ranng o een roduc quay andard

requred or exor;

zz encouragng sm arcaon n he andardeng roce hrough he rovon o

noraon on andardzaon and accredaon acve;

zz roong he adoon o haronzed andard by tC n rocureen rocedure andhe duon o ha noraon o sm; and

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22PART I


zz enurng ha naona cercaon ye do no oe exceve burden on sm

or coance rocedure and ha grou cercaon or a r n oca regon

rooed o ower co whe enurng ha here ru n he conro echan a we

a roong abeng nave o gve added, owco aurance.

4. TNCSMElinkages

the eabhen o uanabe nkage beween sm and tC one o he o ecen

way o negrae doec uer no GC. secc rooon eaure coud arge oregn

drec nveor who woud renghen he oca uy caacy (UCt, 2006) a recoended

n he so paoo Conenu ha recognzed he orance or deveong counre and econoe

n ranon o bud ronger uy caabe reonve o arke deand, rooe echnoogy

deveoen and raner, encourage enerre neworkng, ncreae roducvy and rove he

coevene o her enerre.

in wo o he cae ude, mcroo gy and iBm e a, he tC oeraed uer

deveoen rograe whch eabhed rong nkage wh her sm arner. o a

deveong counre, however, have been ucceu n aracng oregn r ha nve n heoca econoy by eabhng uch nkage. in mexco, tCsm nkage have beneed no ony

r er uer, bu ao econd er uer, whch have been aed n eeng okwagen

quay requreen by r er uer (box 7).

Box 7. Linkages between rst- and second-tier suppliers of Volkswagen in Mexico

In Mexico, firms that are first-tier suppliers of Volkswagen, such as FTE Mexicana and Johnson

Controls, have helped second-tier suppliers to improve quality through certification ISO/TS 16949,

which is the reference standard for quality management system in the automotive sector, based on

ISO 9001. For the second-tier suppliers, it was problematic to meet quality requirements that were

more demanding than local standards. Most first-tier suppliers in Mexico confirmed that their role

in the global supply chain has expanded and deepened as they started developing second-tier

suppliers. They became responsible in setting product specifications and providing advice to theVolkswagen plants on product management.

Source: UCt cae udy, by uz uran (2006).

Governen can acae bune nkage by rovng he nveen cae and by

argeng tC whch are known o eabh nkage wh oca r. he ae e he governen

ha o rooe bune deveoen ervce ha can ake her sm ore arnerh ready.

fro a echnca aance erecve, a varey o nave o rooe nkage ex, ro

urey donordrven and governendrven rograe, o ubcrvae ecor arnerh. for

exae, UCt bune nkage rooon rograe rooe he creaon o durabe and

uuay beneca arnerh beween tC aae and arge oca coane on he one handand sm on he oher, o a o enhance he roducve caacy, ecency, coevene and

uanaby o her reaonh. the rograe beng eened by a Bune eveoen

servce Cenre a ead acaor, ycay UCt mptC Cenre, n coaboraon wh he

oca inveen prooon gency, eeced tC and donor. there are ao urey rvae ecor

drven rograe, uch a uer deveoen rograe carred ou ndeendeny by tC

n her own enere, and oee whn her cororae oca reonby rograe. sm

n gy and e a beneed ro uch uer deveoen rograe. wedeveoed

enrereneurh cuure he o bud good quay oca r ha can bene ro he reence o

oregn r. rorae echnoogy and k deveoen ao acae nkage.

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24PART I


zz proong bune nkage beween tC and sm and acang her uer

deveoen rograe where sm are coached and enored n key area uch a

degn and roducon engneerng.

6. IPRprotectionthe naby o enorce ip n he creave ndure o cnea and oware, where he sm

ake gncan conrbuon o vaue added, wa e o be a ajor obace o sm growh and

aby o bene ro GC. in ore aure ndure, he ue wa no condered o be arcuary

reevan by oca sm. However, oe coan eerged n he car ar ecor, whereby oca

uer e ha oe m dd no have an ehca robe wh handng buern o a coonen

ha ha been deveoed by one uer o anoher. the urvey conr ha even hough ip

roecon no a ver bue or a deveoen robe, he ac ha a governen arng o

enorce coyrgh and anracy aw ay uae new econoc acve, eecay n eergng

ecor. i ao conr ha he ajory o sm n deveong counre ack he neceary

awarene, aby and nance o uy roec and exo her neecua ae.

for sm n advanced econoe, he nk beween nnovaon, neecua roery rgh and

undng cruca. thee sm no ony need o roec her cungedge nnovaon ro beng

coed, bu ao are deenden on ip o arac nveen and coercaze her nnovaon

(Jenen, 2005). the tokyo con saeen conder ip reor a eena and recoend

governen enhance sm vaue obaned ro neecua ae and neecua roery by:

zz ang awarene abou ip rgh aong sm;

zz proong ye o vaue and anage ip ae;

zz Creang onne arkeace where sm can oer her ip ae;

zz facang he ng o aen by sm;

zz prearng gudene or tC on he ar reaen o sm ip; and

zz Heng sm o egay acqure ip ae ro unvere and reearch cenre.

fro a deveoen erecve, evdence how ha renghenng ip roecon ay have

a ove ac on he aracon o fi and echnoogy raner o deveong counre (lod,

2005). However, he exen o whch ip roecon ex n a gven counry no he ony creron or

he queon o wheher oregn echnooge are ranerred and eecvey aborbed n he recevng

counry. Whe ip roecon ay an oran roe or nveen decon n area nvovng reearch

and deveoen (&)nenve, coex and eay aed echnooge, oregn nveor aach

reavey e wegh o ip roecon n area o od, andardzed and abournenve echnooge

ha requre e & (UCt, 2003, maku, 2005).

in he area o and uc, ronger roecon and enorceen o ip uch a coyrgh

ay rovde oran bene o oca sm. Coeon aw and ocy houd be n ace o

reven rce ha are unaordabe or conuer. he ae e, creavy n he cuurandure and n oware deveoen cuuave n naure, hu oen acce o exng conen

and he oby o carry ou oowon roveen aong oware eca becoe decve

acor or he rooon o creavy.4 Here, nonexcuve or o roecon, uch a oen ource

and creave and echnoogca coon ay coeen radona ip nruen. the box beow

urae he roe ayed by he geran Coyrgh Coon n reducng he hgh eve o ip

voaon n he cnea ndury (box 9).

4

the cuuave naure o nnovaon, n arcuar n he area o noraon and councaon echnooge, and he need o ada he ip yeaccordngy, ha receny been ehazed by he uroean paen ce (p), ee p, scenaro or he fuure. How gh ip rege evoveby 2025? Wha goba egacy gh uch rege have?, munch, r 2007, . 88 e eq.

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25PART I


Box 9. Protecting IPRs in the cinema industry: the Nigerian case

The case study on the cinema industry in Nigeria revealed a strong need to reduce a high

level of IPR infringements and violations. It is estimated that over 35,000 video clubs in the country

rent out local and foreign movies without authorization. Piracy, especially counterfeiting, suffered a

setback in recent years because of the aggressive strategies of the Nigerian Copyright Commission.

Major efforts aimed at strengthening the regulatory environment include:

a. The approval of the Optical Disc Regulation, under the Nigerian Copyright Commission;

b. The establishment of the Motion Picture Council of Nigeria;

c. The Nigeria in the Movies initiative launched by the National Film and Video Censors Board;

d. The Strategic Action Against Piracy (STRAP) initiative launched by the Nigerian

Copyright Commission, under which vigorous anti-piracy raids have taken place and

pirated goods worth billions of dollars have been seized and destroyed; and

e. The revamp of the Video Rental Regulation by the Nigerian Copyright Commission to ensure all

persons engaged in the business of rental, hiring, leasing and loaning comply with the guidelines

and ensure that copyright owners receive due compensation for the use of their works.

Source: UCt cae udy by a (2007).

C. Conclusions

hough dcu o eabh coon rend n he dvered unvere o sm and acro

ecor and regon, he cae ude rovded new ngh on ncreang he arcaon and

rovng he erorance o sm n GC. ne reu ha and ou ro he reearch ha

ucceu arcaon n GC ay brng aby: a r ha are abe o rean n vaue

chan() dee keen goba coeon, or sm ha ucceed n jung on board, are key o

wne an exanon o her bune. th ore oen accoaned by ugradng o echnoogca

and huan caa, a a reu o a greaer exoure and acce o noraon, bune racce

and echnooge. Cooeraon whn he chan a key ucce acor ha brng ubana bene

n er o au, noraon ow and earnng obe.

the cae ude ao ugge ha he awarene o beng ar o a GC a uncon o he

roducon acvy n a gven ecor and/or he oon o a r n he chan. sm n he oware

ecor, or exae, are ore a o underand he rucure o he vaue chan o whch hey oerae

han he average sm n oher ecor, or whch he conce o GC no away eay o gra.

th key reaed o he coexy o he conguraon o he vaue chan (a n he cnea

ecor), or o he ac ha sm occuy ower oon n he chan, and hereore hey have ed

knowedge beyond he urroundng envronen (sm uer n he auoove ecor). Budng

awarene an eena arng on o any governen nervenon o ncreae he arcaon

o oca uer n GC.

vera, he arge body o eraure avaabe on GC how ha n a gobazed econoy,

coeve advanage can be creaed n any ecor. soe deveong counre have deveoed

hghy ucceu exor ecor even n radona coode. xor o horcuure or reh

ru hrve becaue o her coe e wh goba buyer. ewhere, uch a n gera and n

Cooba, audovua ndure oer new nereng exor oorune. thu, ocyaker need

o underand oorune boh n aure and eergng ecor n her econoy ha oer sm

he oena o negrae no GC. i oran or deveong counry governen o revew her

exng sm rooon and exor rooon acve and o ada he o he new reay and

requreen o goba arke.

fnay, deveong counre need o ace he deveoen o roducve caace a he hear

o naona oce. the deveoen o doec ndury or ervce nework, whch woud be abe o

nk eecvey wh nernaona roducon nework, ao requre he rooon o enrereneurhand enhancng coevene a r eve hrough echnoogy and bune nkage. oec

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26PART I


uer need o conany ugrade and nnovae o anan her coevene when oerang

whn GC. Governen whch a a ncreang sm coevene need o deveo onger

raher han horer eaure. pocy uor coud be rovded or echnoogca ugradng and

or ncreang doec vaue added o acheve, anan and ugrade nernaona coevene

n ncreangy ohcaed roduc and ervce.

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27PART I


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