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Session Overview
PS-1.01: Trade, foreign direct investments, value chains and innovation network 1
Wednesday, 12/Oct/2016:
2:00pm - 3:30pm

Session Chair: Sanghita Mondal, P.G.D.A.V College, University of Delhi
Discussant: Keun Lee, seoul national university
Location: Savoy Room-1 (Homann)

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National Innovation Systems, Global Value Chains And Economic Development

Jan Fagerberg1, Bengt Åke Lundvall2, Martin Shrolec3

1University of Oslo; 2Aalborg University; 3Czech Academy of Sciences


National innovation systems, global value chains and economic development


This paper deals with an issue that has attracted considerable interest from scholars and policy-makers for a long time already, namely the role of “openness” for economic development. The topic has become even more central recently due to the deepening integration of less developed countries in the global division of labor. On this background researchers have purported that joining global value chains may enhance developing countries‟ possibilities for technological upgrading and economic catch-up. To explore the issue a comprehensive framework, i.e., one that allows for the inclusion of a range of relevant factors including domestic capabilities as well as different form of “openness”, is developed. On this basis an empirical model of economic development, emphasizing the role of capability-building as well as different forms of “openness”, including participation in global value chains, is formulated, and applied to a large dataset containing 114 countries, including many least developed nations, over the 1997-2013 period. The construction draws on a variety of sources including the UNCTAD-Eora GVC Database (on global value chains) which has recently become available. The paper explores, using descriptive analysis as well as econometric methods, the relationship between measures of economic development on the one hand and measures of different aspects of openness of innovation systems, national technological and social capabilities, natural resources dependence and other condition factors on the other hand. Finally, the implications for development strategy and policy are considered.

Innovation Consolidation Nexus: Evidence from India’s Manufacturing Sector

Beena Saraswathy

Institute for Studies in Industrial Development (ISID), India

Often regulatory authorities approve consolidation strategies such as mergers and acquisitions based on the likely impact of it on innovation, which in turn leads to better welfare outcomes. The relationship between consolidation strategies and technological performance was hardly a concern during the initial years of merger activity globally as well as in India. The focus of research during those days was concentrated on the impact of consolidation strategies on production efficiency and market concentration and their trade off. However during the era of globalization the firms realized the potential of consolidation strategies to overcome the challenges posed by the fast moving technological revolution and to take benefit out of it. As a result there has been an unprecedented surge in the number and value of technology related mergers, acquisitions and alliances during this era with a view to minimize cost of production and to eliminate market competition. The present study is an inquiry into the innovation efforts through consolidation strategies in the context of the recent competition regime implemented in India by replacing the three decade old MRTP regime.

‘Tilting Towards South’: What Determines the Changing Pattern of Global Value Chains?

Swati Mehta

Guru Nanak Dev University, Amritsar, Punjab, India

Geographical fragmentation in the production process has reoriented the attention of scholars towards understanding the ‘pattern’ and ‘determinants’ of international trade. The decreasing cost of travel and surge in information and communication technology (ICT) in an increasing globalised era has transformed the ‘nature of factor endowments’ determining the direction and content of international trade. From ‘trade in goods’ to ‘trade in factor endowments’ the world is increasingly experiencing ‘trade in tasks’. The concerns of the countries have largely shifted towards increasing their share in global value-chains (GVC) to boost growth and employment.

Thus, with the aim to examine the changing structure of ‘value-added’ and ‘value-added in exports’ from the manufacturing sector, data from 60 countries were collected and compared. It was found that the share of both ‘value-added’ and ‘value-added in exports’ from South-East Asian countries has increased over the years as compared to G7 and other European Union (EU) countries. Second, the paper also tried to econometrically examine the determinants of such change. Using panel data regression model, it was found that for G7 and EU countries, the impact of ‘product innovation’ and ‘high-skilled labour’ is significant and positive. For developing countries, price and process innovation has a significant impact in determining the changing structure of value-added in production and exports. Moreover, it was also found that the positive impact of ‘openness’ is more witnessed in developed countries as compared to developing countries, which is in contrast to what has been claimed by neo-liberal proponents.

The paper also discusses policy implications as ‘strategies’ based on ‘system of innovation’ approach for increasing share in value-added by different countries.

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