Abstract

Moving up in the global economy means upgrading a country's manufacturing base to higher value-added activities in the commodity chain. Participation in global commodity chains, even at the bottom, in the past has enabled firms to acquire the general knowledge as well as technical skills for upgrading. Aggregated across and economy, this has resulted in substantial economic development, at least in the case of the East Asian Newly Industrializing Economies. The past twenty years has seen a growth in the relative importance of buyer-driven global commodity chains, relative to the producer-driven chains that characterized the mid-twentieth century. Buyer-driven commodity chains, with their highly networked, flexible forms of organization, would especially seem to favor organizational learning and the industrial upgrading that it foster. Moreover, the informal organization of buyer-driven commodity especially favorable to Chinese business firms, with their corresponding reliance on quanxi networks. This, in turn, should portend success for East and Southeast Asian countries in which the offshore Chinese business community plays a key role. Yet the ability to move into higher value-added economic activities may no longer be a certain route to economic success. In a world where the generation of wealth lies increasingly in design, marketing, and retailing, it is not clear that industrializing countries will be able to move up and out of labor-intensive manufacturing. This is because buyer-driven commodity chains are increasingly controlled by global retail conglomerates, making movement into higher value-added activities more difficult than before.