Economic and Social Upgrading in Global Production Networks: A New Paradigm for a Changing World
A significant proportion of trade now takes place through coordinated value chains in which lead firms play a dominant role globally and locally. The outsourcing of production by Northern buyers has stimulated the growth of manufacturing, agriculture, and service industries in the South. It has promoted regional and global production networks (GPNs) that have opened up supply opportunities in new and expanding markets, including China, India, and Brazil. Firms engaged in GPNs have opportunities for economic upgrading through engaging in higher value production or repositioning themselves within value chains. However, they also face challenges meeting buyers’ commercial demands and quality standards, which smaller and less efficient producers find hard to satisfy. The expansion of global production in labor-intensive industries has been an important source of employment generation. Many of the new jobs have been filled by women and migrant workers who previously had difficulty accessing this type of wage employment, and they have provided new sources of income for poorer households (Raworth, 2004; Barrientos et al., 2003). Where such employment is regular and generates better rights and protection for workers, it can promote social upgrading and decent work. The demand for higher quality standards often requires skilling of at least some workers and provision of better employment conditions. But for many workers, this is not the outcome. Much GPN employment is insecure and unprotected, and ensuring decent work for more vulnerable workers poses significant problems. Indeed, a key challenge is how to improve the position of both firms and workers within GPNs. This is particularly important in developing countries, where firms and workers are increasingly integrated into regional or global production systems involving many locations. Accordingly, this chapter explores the obstacles and opportunities for promoting decent work through economic and social upgrading in the context of GPNs. It draws on previous empirical studies in which we examined each type of upgrading/downgrading separately. Based on these insights, it aims to advance a more integrated analytical framework linking economic and social upgrading/downgrading. Rossi’s (2011) case study of the Moroccan garment industry provides an early application of this framework, which can inform much-needed future research on the linkages between economic and social upgrading. This research indicates that firms’ economic upgrading can, but does not necessarily, lead to improvements for workers.
