The myth of upgrading and development through insertion in Global Value

Chains: a critique based on the Innovation System Literature

Paper Submited to 13th Globelics Internatinal Conference
La Habana, Cuba
Marcelo G. Pessoa Matos (UFRJ, Brazil)
Israel Sanches Marcellino (UFRRJ / UFRJ, Brazil)
Jos Eduardo Cassiolato (UFRJ, Brazil)
Maria Gabriela Podcameni (IFRJ / UFRJ, Brazil)
Abstract
In this paper we discuss the theoretical foundations of the Global Value Chain literature and
juxtapose it to the Innovation System and the Local Innovation and Production Systems
framework. By contrasting the concepts of upgrading and governance with those of learning,
knowledge, capacity building, innovation, governance and power we underline the fundamental
incompatibility of these two strands of literature. The analysis of a series of case studies done on
LIPS in Brazil show experiences of failure in inserting in captive situation in GVCs, the
predominant relevance of capacity building trajectories gestated at the local and national level
with an important role played by the state, the mismatch between GVC governance relations and
governance structures at the local level, as well as a shortsighted understanding of power
structures. We conclude that the fundamental conceptual and normative divergences call for the
focus to be put on Innovation Systems perspective and on STI policy for promoting sustainable
development.
Keywords: Global Value Chains, Local Innovation and Production Systems, Sustained
competitiveness and development

Introduction
The notion that production is a collective process, comprised by different, connected economic
and social activities and organized by different organizations has been recognized for a long time
(Reinert 1996). In the Renaissance economics debate, Serra (1613) already pointed out that the
difference between the wealth and poverty between cities of the period could be explained by the
presence or absence of diverse linked occupations and economic activities.
Capitalism brought a transnational dimension to this intrinsic collective nature of production. In
the 1980s, explaining the cyclical nature of this globalization of production activities and its
connection with the crisis of global capitalism, Wallesrstein pointed out that in the real world of
historical capitalism, almost all commodity chains of any importance have traversed these state
frontiers. (Wallerstein 1985, p.31).
1

In the present financial-dominated globalization, this has acquired novel important tendencies
and a general agreement about the emergence of a pattern of global production characterized by
dispersion of production with functional integration of economic activities (Dicken 2003) is
found among scholars of different backgrounds and ideologies.
Among the different conceptual approaches that try to capture these trends one could single out
the global value chain (GVC) (Gereffi and Korzeniewicz 1994), international production
networks (Borrus et al. 2000), global production systems (Milberg 2008), and the French concept
of filire developed in the late 1970s by French economists (Raikes et al. 2000).
Without any doubt the GVC literature has been the most influential in this debate. It also has
been extensively utilized by international financial organizations such as the World Bank to
address problems of industrial development in different parts of the world and has served to
legitimize new "market friendly" policies (World Bank 2010).
This paper is part of the Research effort of RedeSist in Brazil to analyze and understand the
dynamics of innovation systems in Brazil and Latin America. It attempts to connect RedeSists
effort with a broader Globelics attempt of analyzing ISs in connection with a perspective of
production chains in a global scale. Based on a conceptual framework that connects the
Innovation Systems Perspective and the Latin American Structuralist School (Lastres and
Cassiolato 2003; Cassiolato and Lastres 2008; Cassiolato et al. 2012; Cassiolato et al. 2013) the
objective of this paper is to present the main foundations of the upgrading arguments for
clusters1 through their insertion in global value chains and discuss them from the perspective of
innovation system studies developed by RedeSist in Brazil2, which has been enriched by in depth
analysis of more than a hundred local innovation and productive systems in the last 15 years
(Matos et al. 2015) in different parts of Brazil and Latin-America. Due to space limitations, we
present details only for few representative cases, which are good example of the findings in the
vast majority of the case studies done by RedeSist.3
The paper is organized as follows. In the next section we present the main propositions brought
by the literature that focuses on the connection between clusters and global value chains,
emphasizing their two main basic concepts: power (which is reduced to the slippery concept of
governance) and upgrading. The second section engages in a critique of previously cited
literature based on the conceptual framework of IS and LIPS. The third section explores a varied
set of empirical evidence which come out from the studies of RedeSist that challenges the
normative proposition of virtuous insertion of developing countries firms in GVC. A brief
concluding section finishes the paper.
1

As argued elsewhere (Cassiolato et al. 2003; Lastres and Cassiolato 2005) the concept of clusters may lead to
shortcomings in the analysis of a complex local reality. Based on this perception we suggest the Local Innovation
and Production System framework to be better suited for capturing complex local dynamics. In section 1 we refer to
clusters for keeping in line with the term utilized by the cited authors.
2
The Research Network on Local Innovation and Production Systems (RedeSist) is an interdisciplinary research
network based on 26 universities, and set up in 1997, at the Economics Institute of the Federal University of Rio de
Janeiro (IE-UFRJ), Brazil.
3
This paper is complementary to the paper by Szapiro et al (submitted to the Globelics 2015). The examples cited in
this paper focus on traditional sectors and Szapiro et al discuss examples of knowledge intensive sectors. Both lead
to very similar main conclusions.

1. Links between GVC and Clusters literature

With the emergence of the GVC literature and the growing attention paid to the global-local
relation in the context of accelerated globalization, some efforts have been mobilized in order to
build links between the GVC and cluster concepts. In this section we present the main
contributions of this literature.
Upgrading is considered as a path to achieve competitiveness following two options: low road
to competitiveness, typically achieved through price and costs competition (including that based
on labor costs reduction); and high road competitiveness through the expansion of
technological capabilities. In this analysis, the global value chain governance emerges as the
concept able to provide an explanation for upgrading conditions faced by cluster firms [local
linkages] integrated to a GVC [global linkages].
According to this approach, the insertion in global value chains affect cluster enterprises
upgrading through the interaction between the lead firm and the local producers. Essentially, that
would depend on the chain governance configuration and its dynamics (Humphrey and Schmitz
2000, 2002). Others put especial emphasis on sectoral conditions of the cluster and the GVC
specialization that can also affect upgrading (Pietrobelli and Rabellotti 2006).
1.1. Global vs. Local Linkages
In the comparison between global and local linkages, Humphrey and Schmitz (2002) implicitly
assume that there is no qualitative difference between those two concepts. In other words,
according to this view, linkages are considered the same, as if local geographic features could not
be a source of heterogeneity in a highly globalized world. Indeed, by focusing the analysis on a
value chain perspective it can be argued that the linkages are circumscribed to the productive
sphere, which limits inter-firm relations to transactions, production processes and allocative
decisions. Socio-institutional features are not widely taken into account, neither features related
to proximity and the local context, nor questions related to learning-by-interacting.
In a latter work, Schmitz (2004) distinguishes global and local linkages, going into more detail
about the local firms upgrading conditions in a global value chain context. Bringing together the
two kinds of linkages in the same analysis, according to this less superficial view, requires the
understanding that relations in local and global scales do not follow necessarily the same logic,
but the latter is able to influence the former. In order to discuss the way global linkages affect
local linkages and local upgrading, the author argues that it is necessary to shed light on features
related to the local and regional development literature, global value chains literature and global
standards.
This growing interest in local and regional development thinking, however, cannot be considered
as a way to overcome the limitation in the original perspective on the relation between local and
global linkages. This limitation is related to the disregard to local heterogeneity as a source of
competitiveness. Even when empirical research pays attention to features such as agglomeration
3

economies, local upgrading strategy, public policies and institutions, it cannot be considered as
part of an integrated view.
That is so because there is no systematic incorporation of these features in the existing
methodological and theoretical approaches in GVC literature. As a consequence, efforts that
bring together the above-mentioned features to a GVC analysis should be considered more as a
result of the researcher subjective view over the case studied than an outcome of an integrated
methodological approach that concretely takes into account the local linkages while investigating
the influence of global linkages over local productive systems.
1.2. Upgrading
The concept of upgrading is used and stressed by value chain scholars as well by industrial
cluster and trade scholars. Because of this, the concept became quite flexible and vague. Morison
et al. (2006) concluded that upgrading is a rather fuzzy concept. In a synthesis effort, MeyerStamer et al (2004) draw a general definition of upgrading as the improvements made by firms to
perform better in terms of its activities or outputs. Jennifer Bair (2005, p.167) also acknowledges
that this concept is problematic: Although central to the debate the concept of upgrading in GVC
has been subjected to important criticism.
In the GVC literature, upgrading is considered not only in economic terms. Some authors also
work with this concept presuming upgrading in a social dimension (e.g. Gereffi 2014; Barrientos
et al. 2011). By doing so, they argue that GVCs and social and economic development can be
articulated due to the formers ability to boost social and economic upgrades and hence social and
economic development. It is closely connected to traditional perception of development as
automatically derived from economic growth.
Considering the economic dimension of the concept, four categories of upgrading can be
identified in the GVC literature (Humphrey and Schmitz 2002; Pietrobelli and Rabellotti, 2006):
Process Upgrading: transforming inputs into outputs more efficiently by reorganizing the
production system or introducing superior technology;
Product Upgrading: moving into more sophisticated product lines (which can be defined in
terms of increased unit values);
Functional Upgrading: Acquiring new, superior functions in the chain or abandoning
existing lower-value-added functions, to focus on higher-value-added activities;
Intersectoral Upgrading: firms of clusters move into new productive activities, applying the
competence acquired in a particular function to move into a new sector.
There seems to be a well diffused perception that functional, product and process upgrades are
derived from inter-firm relation in the chain. These phenomena, frequently, are described as
being impelled by lead firms considering their needs in terms of quality standards, product or
processes specifications or patterns.

Some cases of functional and intersectoral upgrades, on the other hand, are seen as a consequence
of interaction between suppliers and one or more lead firms in value chains where the power
relations are less uneven. In this case, the main determinant to upgrade related to the supplier
capabilities and firms strategies.
1.3. Value Chain Governance and Upgrading in Clusters
While relating value chains to clusters, and thus presuming it is possible to relate insertion in
value chains to territorial development, the central point in the literature relies in the link between
governance in global chains and upgrading conditions in clusters.
Assuming simplifications about the influence of extra-firm social and political features, Gereffi et
al. (2005) formalized a typology of value chain governance that can be linked to upgrading
conditions in supplier firms. Using the previous schemes of governance (Gereffi 1999;
Humphrey and Schmitz 2000, 2002), a more diversified one was elaborated, including two
extreme categories: Market (coordination by price mechanism) and Hierarchy (integrated firm).
The intermediary categories are three: Modular, Relational and Captive.
Modular value chains are those where suppliers make parts according to a customers
specification, which constitute entire modules of a final product. The suppliers provide turn-key
services. By doing so, the supplier is able to incorporate more complex activities and to take
advantage of his greater capabilities and the well defined product and process patterns in industry
in order to adapt production to work with a variety of customers. This type of chain is closer to
market than to hierarchy. In this context, functional and even intrasectoral upgrades are feasible
because of the relative strategic independence of the supplier.
In captive value chains there are small suppliers highly dependent on global buyers, lead firms
with a great power to control and coordinate activities in the chain. It is closer to hierarchy than
to market and favors fast product and process upgrading, since it depends on lead firms needs.
But other kinds of upgrading, related to the high-road competitiveness, are not stimulated. They
are even inhibited by the chain leader.
Relational value chains, constitute an intermediary case between captive and modular chains. It
presents complex relations between customers and suppliers with high levels of mutual strategic
dependence and asset specificity. In this scenario, upgrade depends on collective initiative of
firms in the chain, regardless of their geographic proximity. Government support is not
considered in the theory. It is strongly related to social features, but there is few recognition of
the relation between these social features and the local dimension.4

To reinforce the idea that features related to territory are not essential, Gereffi et al. (2005), gives an example of
relational global value chain based on social capital related to Chinese ethnicity linking Chinese immigrants firms in
Singapore and China (Menkhoff, 1992). But, it is not sufficient to state that territorial features are not highly relevant
to relational value chains since it is closely related to trust and a cooperative culture in clusters. As discussed in
section 2, whole bodies of literature in economics, geography and sociology provide huge evidence of a strong link
between relational dimension and territorial proximity even in a globalization context.

Figure 1. Global value chains governance types

Source: Gereffi et al (2005).

As argued by Humphrey and Schmitz (2002), not all forms of chain governance are positive for
upgrading conditions in every situation. Any of them bring pros and cons since they obstruct
some ways to upgrade while facilitating others. To solve this puzzle, the dynamics of governance
is presented as a way to justify that value chains cannot represent a permanent obstacle to
upgrade and development.
The characteristics of the value chain are not considered as rigid and the governance dynamic can
change upgrading conditions in chains and also help to overcome limits but making opportunities
transitory. That occurs because power is relational, thus flexible, and because coordinating chains
and its transactions are costly (Humphrey and Schmitz, 2002). This possibility of changes is
explained in this literature, also, by the changes in technologies and in conditions of transaction
codifiability and complexity (Gereffi et al, 2005). Latter we will turn back to this point,
highlighting that a broader conception about governance and sources of powers implies rigidity
instead of flexibility, putting in check the implications of governance dynamics over upgrading
proposed by GVC literature.
In a nutshell, the proposition about a causational link between GVC governance and upgrading in
clusters provide a view over means to achieve firm-level competitiveness. The more asymmetric
power is in the chain, the more suppliers technological capabilities and firm organization would
be improved through lead firms intervention. The more equally power is distributed in the chain,
the easier would be for suppliers to build and independent strategy in order to conduce
technological and organizational efforts, creating competitive advantages. Each situation is
6

supposed to have advantages and disadvantages5, but the dynamics of governance, in the view of
the cited authors, justifies the insertion in Global Value Chain as a path to achieve development.
In the next section we contrast this with some of the main contributions of the innovation system
literature.

2. Analysis of shortcomings and limitations of the GVC approach based on

the IS and LIPS framework
Systems of innovation, defined as a set of different institutions that contribute to the development
of the innovation and learning capacity of organizations and individuals, comprise a series of
elements and relations that relate production, assimilation, use and diffusion of knowledge
(Freeman 1982, 1987; Lundvall 1992; Nelson 1993). Exponents of the IS literature benefited
from the interacting with thoughts developed within a structuralist tradition (Cassiolato et al
2013). In Latin American conceptual ideas of structuralism were developed since the 1950s with
a great contribution of the Economic Commission of Latin America and Caribbean (ECLAC).
Among other aspects this tradition underlines the dialectic complementarity between
development and underdevelopment, i.e. developed countries depend on the existence of
underdeveloped countries for achieving their living standards. In this perspective
underdevelopment is not a prior phase in a linear trajectory towards development. There are
power and technological asymmetries which place major hurdles for countries to overcome this
situation. This can not be done without taking into account the specific natural, socio-cultural and
institutional characteristics that evolved along concrete historic processes (Cassiolato and Lastres
2008; Cassiolato et al. 2012).
Combining these influences of the IS literature and of Latin-American Structuralism, RedeSist
developed the analytical and methodological framework of Local Innovation and Production
Systems (LIPSs), for analyzing production, learning and innovation and their impact on
competitiveness and sustained development (Lastres and Cassiolato 2002; Cassiolato et al. 2003,
Lastres and Cassiolato 2005).
Local Innovative and Productive Systems (LIPS) represents an analytical framework for
understanding the processes of generation, dissemination and use of knowledge and the
productive and innovative dynamics. It encompasses an ample set of economic, political and
social actors and their interactions, including: producers of final goods and services; suppliers of
raw materials, equipment and other inputs; distributors and marketers; workers and consumers;
organizations focused on education and training of human resources, information, research,
development and engineering; support, regulation and financing; civil society, cooperatives,

In the first one, product and process upgrading (including improvements related to labor costs squeezing) can occur
quickly and very low skilled producers benefit from learning with powerful lead firms. These leaders, on the other
hand, tend to hinder functional and intersectoral upgrading since its not interesting for them to help partners to
achieve strategic independence. In the second situation, product and process requirement must be accomplished by
firms without any collaboration of more skilled partners, but once the firms built a considerable set of capabilities
without the support of any industrial or innovation policy they can be more independent and find own means to be
more competitive and to innovate.

associations, unions and other representative bodies. Such a systemic view includes actors and
production and innovation activities:

with different dynamics and trajectories, from the most knowledge intensive to those that use
traditional or indigenous knowledge;

of different sizes and functions, originating in the primary, secondary and tertiary sectors,
operating on a local, national or international sphere.

In the following subsections we highlight the main conceptual building blocks of the LIPS
framework and contrast them with the literature that focuses on the connection of GVC and
cluster.
2.1. The territory as a multidimensional construction
The LIPS framework departs from an interdisciplinary understanding of the territory, but with
strong influence from geography. In this perspective, there are multiple dimensions that
characterize a territory which lead to specific characteristics of production activities, capacity
building and innovation.
Generally the idea of territory refers to the geographic portion appropriate by a human group to
ensure its reproduction and the satisfaction of their vital needs. There are several figurative
meanings of the word territory; all retain the idea of personal or collective domain, referring to
different contexts and scales. Each territory is thus molded through a combination of internal and
external conditions and forces and should be understood as part of an entire space. The territory is
not reduced to its material or concrete dimension, featuring a variety of dimensions, such as
(Raffestin, 1993; Santos, 2000): physical (referring both to its physical characteristics and natural
resources, such as climate, soil, relief, vegetation and subsoil); economic; symbolic; sociopolitical; and cognitive.
In the following we briefly point out how these different dimensions of the territory underline the
importance of the locality or region as an analytical unit for the study of innovation systems.
In regards to the economic dimension, contributions from different areas, notably economic
geography, but also studies inserted in the framework of the industrial economics and
management literature, highlighting the potential gains from the organization of production
processes in local spaces. These analysis show that proximity lead to important synergistic
effects, referred to as economies of agglomeration, that is, advantages derived of geographical
proximity of actors, their interdependencies and complementarities in the production process. The
articulation of agents from different parts of productive chains can lead to rationalization of the
use of production factors and greater efficiency in the articulation of different production stages.
Among the specific factors that may contribute to this type of economy of agglomeration, the
issue most commonly cited is the sharing of the same suppliers of inputs and services providers,
the utilization of the same physical infrastructure (facilities and equipment) and the articulation in
local techno-productive networks (Britto 2004).
8

The symbolic dimension refers to the construction of affective bonds, and cultural identity of the
individual or social group with its immediate local context. Culture figures at the same time as a
backdrop, an environment and a way of mediation of social relationships (Castilho et al, 2009;
Lima, et al., 2007). The local space is the basis of identity formation and territoriality. The later
concept can be understood as the relationship between an individual or social group and their
environment, expressing a sense of belonging and a way to act within a given territory (Raffestin,
1993). These modes of action are essentially cultural and it is this culture that can give credibility
of existence and identity to a group of people or community, encouraging their interaction based
on mutual recognition and formation of trusts. As proposed by Santos (2000 and 1996), the
locality is an intermediate between the world and the individual, in which people are connected
by the feeling of belonging and by useful activities for the economic, social and cultural
development of the community (Matos and Britto 2011).
In respect to the socio-political dimension, the local sphere is the smallest unit in which personal
relationships are established and power relationship develop. Much of the socio-political relations
are built from the frequent, direct and face to face interaction between the agents. Based on this
interaction both forces of convergence and divergence are reinforced.
Convergence is related to the so-called "social capital", understood as the formal and informal
institutions that affect levels of trust and interaction in a social system. The emergence of the
concept of social capital is linked to the recognition of the importance of considering the structure
and social relations as fundamental to understand and intervene in economic dynamics. A high
level of social capital favors cooperative relations, nurturing interactive learning as well as the
construction and transmission of knowledge. Thus, it facilitates collective actions that can lead to
articulated productive systems. Recent criticisms of the concept of "social capital" have put
emphasis on alternative terms such as the "social capabilities" (Albagli and Maciel 2003;
Arocena and Sutz 2003).
The critique of the social capital concept is in part related to the recognition of social structures as
a hierarchical system of power and privilege, determined both by material relations and by
symbolic relations among individuals and subgroups. The relative position of social groups in
this social structure, derives from the unequal distribution of resources and power. The social
dynamics is governed by the struggles in which agents seek to maintain or change the balance of
power and the distribution of resources and power. Understanding these social structures as
spaces of relations with its own logic, highlights the importance of the local, once these relations
are shaped by specific formal and informal institutions (Bourdieu 1987 and 1989).
Finally, the cognitive dimension refers to the context and conditions for the processes of
generation, use and dissemination of knowledge. Given the central role that assigned to capacity
building in the innovation system and in the LIPS literature its local specificities are discussed in
more detail in the next section.
In sum, the local territory is understood as a multidimensional construct that influence individuals
and organizations in many ways. It is the objective real place where most relations are
established; relations that are qualitatively different. The local territory is, thus, the foundation

based on which individuals and organizations interact with wider spheres of the region, the nation
and the world.
The perspective given by GVC literature to the relation between global and local dimensions is
dichotomous. Departing from a binary logic, global and local are regarded as competing
dimensions. In the context of accelerated globalization process, the existence of a growing trend
to cultural and social homogeneity is presumed, causing and increasing domination of the global
features over local ones.
In the meanwhile, since the 1990s the IS literature is refuting theories about a supposed tendency
to techno-globalism and restating the central importance of the local sphere (Freeman 1999,
Cassiolato and Lastres 1999). The IS literature shows that this position is quite simplistic and
ignores, however, the importance of local dimension as important source of competitiveness and
technologic change. These specificities of each local territory can serve as a basis to competitive
advantages while they permit the creation of asymmetries related to knowledge creation and
application, cooperation routines and innovation patterns that cannot be easily replicated in other
localities with different characteristics. It follows that there is not a growing dominance of the
global over the local, since local dimension is not only gaining importance but also undergoing
changes resignifying itself. In this sense, there is a dialectic relationship between global and local
not a dichotomous one.
Even if the GVC literature recognizes that sectoral conditions of a cluster may affect the dynamic
of a firm inserted in this global chains (Pietrobelli and Rabellotti 2006), there is no explicit
theorization about the influence of institutions, public policies and geographic factors, among
others (Gereffi et al, 2005). Once the focus is circumscribed to productive relations, there would
be no qualitative difference in linkages at the local level and at the global level.
Not considering the socio-institutional aspects highlighted in the IS literature and the other
dimensions of the territory discussed above leads to the fallacy in the argument that local and
global linkages can be reconciled and compared. As discussed above, recent efforts to shed more
light on the specificities of the local dimension (Schmitz 2004) are casuistic and insufficient for
providing a comprehensive analytical framework.
Its doubtful whether the local innovation system literature could serve to fill this gap in the GVC
literature. Certainly this could not be done from a complementary approach, once the
incorporation of the elements of the IS literature cited would imply in the need to profoundly
revise some foundations of the GVC literature. If the territory comes in the level global playing
field disappears. And this level field is the foundation for thinking about governance
characteristics that prevail everywhere, putting the same challenges and opportunities for any
firm, irrespective of where it is located.
2.2. Localized capacity building and innovation
2.2.1. Knowledge and interactive learning
The LIPS framework gives especial emphasis to the learning and capacity building processes. If
on the one hand the absorption of codified knowledge is not restricted by any geographical
10

sphere, on the other hand in those cases were tacit knowledge plays e major role proximity and
direct interacting are fundamental. Not encoded knowledge on production processes, the
problem-solving and decision-making ability applied to specific circumstances and so forth is
implicit and embedded in individuals, organizations and even regions, with strong local
specificity. The access to this knowledge depends on territorial proximity and on cultural and
social identities (Cassiolato and Lastres 1999, Cassiolato et al 2003).
The evolutionary and IS literature characterizes learning as an essentially social and interactive
process (Lundvall and Johnson, 1994). This perspective gives special relevance to the proximity
among agents as a facilitator of learning processes. The IS literature associates this proximity
especially with the institutional framework. When focusing on National Systems of Innovation
we are talking about those aspects that give some level of unity and specificity to each nation,
such as language, formal and informal codes of behavior, etc. When moving to the local sphere,
we find that all different dimensions that characterize a concrete local territory, as discussed
above, help to shape the specific context of interaction.
Thus, especially for the transmission of tacit knowledge, the proximity in physical, economic,
symbolic, socio-political and cognitive terms is decisive for shaping learning processes. The
LIPS literature provides rich evidence of how direct interaction helps to calibrate, adapt and
augment the capabilities of transmitting agents and receivers (Cassiolato et al. 2003). This applies
not only to more frugal modes of learning, such as the doing-using-interacting (DUI) mode
proposed by Lundvall (2007) but also to the learning mode based on scientific and technological
knowledge directed to innovation (STI mode). Cutting edge knowledge in the field of oil and gas
for example is build essentially in a context of local interaction in the LIPS in Rio de Janeiro that
developed around Petrobras (Britto and Vargas 2015). The same applies to the LIPS in aerospace
technologies in So Jos dos Campos (Bernardes 2000).
The tacit knowledge shared by a group of agents in a given territory confers specific features to
processes of generating, dissemination and use of new knowledge. This translates into specific
forms of organizing production and innovation processes and can make a positive difference for a
given territory.
Especially in Latin American countries, where the occupation of the territory is a relatively recent
and uneven process, major differences can be identified between localities in one country. In the
same sector there is a strong heterogeneity of structures and productive capabilities in different
locations. This means that the differences observed between countries with regard to the structure
and dynamics of a given sector can also be identified between the various local innovation
systems in a country.
From a normative point of view understanding these specificities of a local knowledge base, the
modes of interaction and the mechanisms established for the expansion and dissemination of
knowledge is critical to mobilized support and promotion initiatives.

11

2.2.2. The Local Dimension of Innovation

The capacity to innovate is a key aspect of the competitiveness of organizations, regions and
countries. Competitiveness is defined as the ability of an organization or groups of organizations
to formulate and implement competitive strategies, enabling the expansion or maintenance of a
sustainable market position. Sustained and dynamic competitiveness depends mainly on the
capacity to learn and to transform information into useful knowledge. This concept of sustainable
and dynamic competitive advantage stands in opposition to the notion of "spurious (or static)
competitiveness" (Fanjzylber, 1988), based on the exploration of not virtuous and eventually
short lived cost advantages related to cheap labor, access to raw materials, disregard of
environmental circumstances, etc.
Beyond a narrow focus to radical innovations in the technological frontier, a fast growing share
of IS literature is recognizing and unveiling innovations that can be characterized as incremental
or even frugal. Incremental innovation refers to improvements that do not alter the industrial
structure, although it can generate greater technical efficiency, increased productivity and quality,
cost reduction, as well as the expansion of applications of a product or process (Abernathy and
Utterback 1978; Freeman 1995; Lastres and Cassiolato 2005).
More than that, from a normative perspective, innovation might be present even if it is limited to
the incorporation of processes, products and organizational features that already exist. Mytelka
(1993) emphasizes the importance of taking into account the process by which producers seek
and introduce products or processes that are new to them, regardless of whether or not they are
new to the competitors. The direct implication of this broad perspective of innovation is that any
economic agent is a potential innovator. That is, throughout the territory there are efforts directed
to the introduction of innovations. Therefore, the analysis and policy focus cannot be restricted to
subsets of a country were the major scientific and technological capabilities are concentrated.
This is especially relevant for less developed countries, and particularly in the case of productive
specializations focused on traditional sectors. In these cases, small improvements in products,
processes, organizational forms and marketing strategies are fundamental for competitiveness.
Innovation involves various scientific, technological, organizational and commercial activities.
The recognition of companies as organizations with a limited set of assets and capabilities is
central to the framework of innovation systems, highlighting the importance of the interaction of
different actors in order to articulate complementary knowledge and skills in innovative search.
These systemic links are strengthened by the direct and frequent interaction between individuals
and organizations in the local space (Lundvall 1988).
Innovative activities are characterized by high uncertainty about its results. Moreover, it is not
possible to predict the consequences of collaborative initiatives of innovative search, providing
greater difficulty in establishing contractual relationships that provide for the full range of
contingencies. From this institutional perspective, it is clear that sharing formal and informal
codes and trust relations help to strengthen these initiatives. As discussed above, these bonds are
reinforced through the direct interaction in the same territorial context.

12

Some authors (Morrison et al. 2008; Pietrobelli and Rabellotti 2006) suggest that considering the
concepts of [economic] upgrade and of innovation as synonyms may constitute a promising path
to reconcile GVC and Innovation Systems literatures. We must discuss this from two angles.
First, exclusively in terms of the final outcome, there might be some proximity between the
concept of incremental innovations that are not new to the market or industry and the concept of
upgrading present in the value chain literature. On the one hand, both might refer to the
incorporation of mostly existing sets of knowledge, helping to reshape products, processes,
market strategies, etc. in order to strengthen competitiveness and move towards greater value
added activities. On the other hand, these concepts might differ sharply when it comes to the
question of what kind of competitiveness is envisaged.
If departing from a truly systemic perspective one is obliged to consider the many factors that
influence the possible trajectories of each organization and of groups of organizations. This is to
say that all the dimensions of the territory discussed above are interconnected and play some role.
Thus, strategies that are disconnected from the organizations context run a greater risk not to be
sustainable and dynamic6. This means that the innovation system literature implicitly calls for an
understanding of competitiveness as proposed by Fanjzylber (1988).
In contrast, many cases that are meant to be successful experiences of upgrading by the value
chain literature (eg. Gereffi 2014) are more connected to the rationalization of processes,
organization of suppliers networks, etc. aiming at cost reduction, thus the low road. These
experiences stand in contrast to the goal implicit in the IS literature once they are more connected
to spurious competitiveness.
Second, when it comes to the understanding of the process, the gap between these two theoretical
lines becomes more evident. In fact, there are main shortcomings related to the lack of formal
theorization about the way upgrade occurs or on the distinction between information and
knowledge (e.g. Gereffi et al 2005). Innovation literature, on the other hand, has already traveled
a long way, departing from more linear innovation models, reaching the chain-linked model
(Kline e Rosenberg 1986) and moving ahead to a systemic model (Freeman 1987).
In contrast, most discussions about upgrading seem to be far more close to a linear understanding
of innovation driven by market pull forces. In this case the market pull initiative translates into
the need to achieve specific predefined standards in order to access the global value chains. The
standards introduced on a rather top-down manner might be divergent to the learning and
capacity building trajectories within a specific territory. Further, the implementation of some
blueprint package provided by lead firms might lead local firms into a lock-in situation, being
captive within the relation with the lead firm.
One main question is if this dialectic of conflicting trajectories leads to positive outcomes for a
territory or country. More than that, eventually the shortcomings in the theoretical understanding

Objective obstacles might arise for example from the spheres of environment (reaching the limit of potential
unsustained exploration of resources and pollution), of social relations (workers exploration leading to tensions and
disruption of social capital), of local economy (weakening of supplier and production networks), of cognitive spaces
(learning divide explored by Arocena and Sutz (2003) among others), etc.

13

of capacity building processes and innovation might favor normative conclusions that stand in
contradiction to those policy initiatives that might foster sustained local development.
This contradiction is more explicitly formulized by one of the first critical analysts of this topic.
Wallerstein (1983) approaches this issue analyzing the commodification of work-force and
contradictory trends to proletarianization. He departs from the assumption that the minimal
acceptable wage of a worker living in a proletarian household is higher than that of a worker
living in a semi-proletarian household. The contradiction is that the commodification of workforce is positive to capitalist class since it expands global purchase power and expands demand
but it also increases labor-costs. Global chains historically react to this instability moving
constantly to geographic areas not fully integrated to the world-system with semi-proletarian
households. As result there are: (i) an illusion of progress in the new areas occupied by chains
because of the relative increase of wages of a part of the work force benefited by
proletarianization; (ii) crisis in former areas occupied; and (iii) a persistent trend to labor-cost
squeezing boosted by competition in the periphery, leading to increasing capital accumulation in
the center of the world-system.
Global chain literature recognizes the globalization process as influenced by historically
determined process, presuming a differentiation between globalization and internationalization.
But, at the same time, it gets closer to a neoclassical approach incorporating an a-historic
perspective of capitalism. The absurd coexistence of historic and a-historic points of view in this
literature makes the reconciling with development and innovation systems literature a harsh, if
not impossible, task to achieve because of its sometimes incomplete and sometimes contradictory
points.
2.3. Governance in LIPS
The only feature important to the definition of governance in GVC literature is interfirm
relationship. This view of governance derives from the transaction costs theory (Willianson
1979) and diverges from some original insights in world-systems and global commodity chains
(Wallerstein 1983). Additionally, questions related to interactions and learning are not involved.
In other words, a narrow view of governance is adopted, including aspects of power, coordination
and managerial control in a network formed exclusively by firms. An obvious gap in this
conception of governance is the role played by institutions, organizations and other actors in
power relations.
In contrast, the IS and LIPS literature see governance as associated to the different patterns of
coordination, intervention and participation in the processes of decision making of different
actors (the State, in its various levels, companies, citizens, workers, non-governmental
organizations, etc.); and to the diverse activities associated to the organization of production and
commercialization, as well as to the process of generation, dissemination and use of knowledge
(Cassiolato et al 2003). Forms of governance vary depending on the specific features of each
territory, namely the production structure, territorial agglomeration, the industry organization,
insertion in different markets (from local to international), institutional density, the social fabric,
etc.
14

This view does not ignore the presence of global firms located outside the LIPS, able to
coordinate local suppliers, influencing local decision processes. But, regardless of the distribution
of power, the LIPS literature analyses all governance structures from a multidimensional
perspective. Two main dimensions are important:

Different types of actors not only firms play a role, but also research and education
organizations, financing organizations, the state and civil society;
Different geographical spheres the effective or potential relations of all local actors with
each other have to be taken into account, as well as their relation with actors in larger
geographical spheres (national and international)

This is summarized in the figure below. The elements with bold lines are those the literature on
the connection of GVC and clusters mainly focus upon one or few lead firms at the global
sphere and its relation to some local firms. In opposition the IS literature and especially the LIPS
literature departs from the understanding that governance relations at the local sphere arise from
the interaction of all local actors of different types and that this governance may be influenced by
one or many different organization at other geographic levels.
Figure 1 Relevant actors in the analysis of governance in GVC literature (bold) and in the
LIPS literature (all)

Global

National

Local

Source: Own elaboration

15

The same scheme and the comparison made between the focus of GVC studies and of LIPS
studies in respect to governance could also be applied to stress the distinction between the two
perspectives when it comes to interaction and learning processes. As mentioned before, the
concept of upgrading seems rather connected to an one dimensional connection between the lead
firm and the local supplier.
Besides the problems found with governance in GVC, its practioneers try to establish relations
between upgrading and governance. As we have seen before, some links are made taking
exclusively into account interfirm power relation based on transactions. Each type of governance,
however, makes some kind of upgrade easier while creates obstacles to other. A criticism is that
this situation could lead to scenarios were supplier firms find themselves locked-in exhausting
upgrade possibilities and almost vainly struggling against obstacles imposed by the same
governance structure they are inserted in.
Once more the exclusive focus on firms causes some shortcomings. Lacking considerations about
institutional and social issues, for example, makes the perception of power quite superficial.
In a discussion about these chains and developing countries, it is important to consider that
frequently lead firms are located in developed countries. Back to the original insights in Global
Commodity Chains in World-Systems literature, power relations in cross-border productive
chains are influenced by power relation between governments and institutions resulting in an
ability to interfere in interfirm power relation (Wallerstein, 1983). An important implication of
chains growing strength is the rise of a transnational capitalist class, whose power can capture
national institutions or create multilateral ones in order to interfere in world capital accumulation
patterns, interfering in public policies, trade and power relation in global chains (Robinson, 2010;
Hopkins, 1977).
Hence, the existence of sources of power asymmetry in chains beyond those based on
transactions contributes to inhibit changes in governance. Despite the mutability of power
relations, it can be assumed that influence of transnational capitalist class over industrial policies,
trade policies, laws and regulatory norms forms a mechanism of self-reinforcement of power in
chains. Lead firms use power to keep being leaders and to maintain suppliers hierarchically
inferior.
This criticism has implications in terms of development and innovation system. Dussel Peters
(2008) suggests that a more realistic view of governance can lead questionings about insertion in
GVC. Since it comes along with high degree of rigidity, the opportunities do achieve progress
beyond underdevelopment through insertion in GVCs can be restricted by governance dynamics
and present limited impacts on the territory.
Thus, it is doubtful if this narrow perspective of governance in the GVC literature may lead to
normative implications and policies that are conducive or not for the local organizations
sustained competitiveness and for local development. Eventually cases that are described as
success stories would need to be revised if a broader (systemic) perspective of interactions and
governance are considered.

16

3. Experiences of LIPS and the insertion in GVC

3.1. Experiences in Fruit production LIPS
A diversity of studies focus on Brazilian LIPS associated to fruits production. The studies
presented by Gomes (2006)7 converge with an in depth study of the evolution of the fruit
processing LIPS in the northeast of the State of Par (Costa et al. 2015).
All are marked by a big or growing relevance of international markets, which the GVC literature
would characterize as global value chains controlled by big buyers. In respect to the pattern of
governance between the global lead firms and local suppliers it can be characterized as a quasi
hierarchical or a captive type, were buyers (together with regulation in different markets) set
norms and standards that have to be met by local suppliers, favoring improvements in products
and processes. Indeed, in general, food value chains are marked by low technologic complexity
of product and high complexity of transactions (involving features such as high importance of
timing in production and logistics, low product durability and growing adoption of patterns due
to regulatory agencies pressures), that conduce, typically, to a high level of power asymmetry and
strategic dependence on global buyer objectives and interests. Gomes (ibid) characterizes the
cases she analyses as major success cases and provides some arguments for explaining that. In
contrast, Costa (ibid) offers a picture of transformation and partial crisis in the LIPS mainly
focused on the processing of the aa fruit. Comparing the main determinants of success and of
ongoing challenges may help to shed some light on the main determinants connected to the
concepts of learning, innovation, upgrading and governance.
The demand structure in the aa LIPS in Par is mainly composed by the intermediate demand of
food and cosmetics industry and of the final demand for the many forms of consumption of the
aa extract. The LIPS has as its basis the traditional local consumption habit and it grew
significantly as the rest of the country discovered it. At the late 1990s, 75% of production was
directed to the national market of other states (especially the southeast).
Since the mid 2000s, the main growing alternative has been the insertion in international
markets. Together with this strategic shift, Costa observes some important transformation in the
structure of local producers. Only part of the traditional firms (mostly focused on the local, state
and national markets) survived, while a new set of producers appears. The new firms are
characterized as being of greater size, a more diversified capital structure (in opposition to the
essentially local original firms) and with more vigorous innovations efforts. These firms also act
in the national market but have a clear strategic priority directed towards exports.
One main implication of this transformation is the growing pressure on the production of the
fresh fruit. This production is marked essentially by extrativism with little price elasticity of
supply. The growing demand brought by the new players and also by the old ones who also
partially expanded their international focus has being exerting significant pressure on the price of
7

Gomes analyzes the similarities and differences in the trajectories in what she calls clusters, based on the
production of fresh fruits with great focus on exports: one in the State of Santa Catarina, one at the border of the
states of Bahia and Pernambuco (cities of Petrolina and Juazeiro) and one in the state of Rio Grande do Norte. Once
our main interest in these studies are on the empirical description of their evolution, its not necessary to discuss
whether the analytical framework of cluster is the best suited.

17

the raw material (fresh fruit) and its price has been rising considerably. Thus, the firms in the
LIPS have been facing a consistently shrinking profit margin, which constitutes an especially
great challenge for smaller producers.
This relative crowding out effect has been changing the local production structure, displacing
traditional small firms and also putting pressure on the traditional extrativist production mode of
fresh fruit, with far less environmental impact than dedicated plantations8.
The figure below shows these main changes along the 2000s decade.
Figure 2 Changing market focus and profit margins in the fruit processing LIPS of
northeastern Par
75%

80%
70%

63%
56%

60%

56%

56%

55%

50%
40%

37%

40%

40%

41%

41%

33%

30%
20%
10%

20%

18%
13%

19%

19%
14%

14%
8% 12%
4%

3%

2%

0%

2003

2008

2011

Source: Costa et al (2015)

Thus, the story of Par contrasts with the success cases presented by Gomes (2006). All LIPS
underwent similar process of greater insertion international market, facing greater standard
requirements and exerting some pressure on raw material markets. One main issues raised by the
GVC literature is the process of learning and upgrading. In how far the cases analyzed differ in
this respect?
The three LIPS analyzed by Gomes underwent main transformations based on significant support
of public policies. Especially important were public organizations dedicated to research and
technological extension (especially EPAGRI in Santa Catarina and CPATSA/EMBRAPA in
Petrolina-Juazeiro). These helped to select/develop the best adapted varieties of fruits for each
8

The same crowding out effect can also be observed in another LIPS based on agroindustrial activities. The
apiculture LIPS in Picos and Teresina in the state of Piau underwent a similar process of insertion in international
market by some firms and the gradual displacement of the traditional production structure based on SMEs, with rise
in unemployment (Veloso Filho et al, 2005).

18

environment and established local facilities were all local actors can have access to information
on new sorts, production processes, etc. These institutions helped to strengthen an important local
knowledge base, which allowed the firms to act competitively in the international scene.
In contrast, the aa production and processing in Par developed from the traditional
consumption habit of local population. Aa is a local native plant and most part is extracted from
native rain forest areas9. The fruit processing techniques underwent incremental improvements
along decades. Thus, the main source of relevance for learning is inside the firms. In second place
come local suppliers. The incremental search for improvements in the production and
commercialization of products and in the development of product varieties is strongly marked by
tacit knowledge and learning by doing, using and interaction (with far more relevance assigned to
the local / national dimensions).
Thus, with varying degrees of relevance of interactions and cooperation with competitors and
with varying importance of scientific and traditional knowledge in the different LIPS all are
marked by a knowledge base which is essentially local / national (federal research institutions).
This is true even for the cases Gomes analyzes, even if the focus is on the connection of clusters
and GVCs.
This does not imply that international links are not important for learning. But these seem to be
rather limited to the assimilation of the standards and requirements the main markets impose10.
The effective implementation of the necessary incremental innovations (the GVC literature would
call upgrading) relies heavily on the local knowledge base, the support of public research
institutions, support institutions, vendors and specialized local / national consultants11.
Even if with different configurations of knowledge organizations and interaction patterns, in all
cases the main (not only) learning processes were based on local / national organizations. Thus,
the difference between success and ongoing challenges cannot be explained on the basis of the
ties to international lead firms and the learning flows associated to these. So let us take a look on
another main issue highlighted by GVC literature.
The study of Gomes focuses on explaining why SMEs performed well even in this changing
environment. She finds that the main determinant was the strong governance structure that was
build on the local sphere. The state is identified as the main orchestrator in the initial stages. In
the case of Petrolina and Juazeiro the creation of production settlements underwent some
planning with a significant part of lands being assigned to small producers. In Santa Catarina the
SMEs benefited from the explicit focus of state government on the support of small firms. The
9

A crucial determinant for the high importance of local sources of knowledge and traditional techniques in this case
is in the specificities of the product. As a native fruit of Brazilian Amazon Forest, aa has unique relation with the
local and regional culture and economy. These specificities related to the territory comprehends the local
environmental characteristics and long historic trajectory of the knowledge about the product firstly maintained by
natives, latter absorbed by Portuguese settlers.
10
According to Costa (2011) in order to adapt to the transformations of the market in the last decade, matching the
requirements imposed by the developed markets of North America and Europe became of central importance. The
main certifications are ISO 22.000, Kosher, Halal, USDA, certificate of organic or biological agriculture, APPCC.
11
The study of the aa LIPS shows that the main innovations introduced were new products that already exist in the
market, technological processes that are new to the firm or eventually to the market, improvements in packaging and
product design.

19

access to the critical knowledge base was also assured trough the local presence of main
institutions and the partnership with the support organization for SMEs (SEBRAE) and combined
credit and training. Strong local representation organizations were created, which were
fundamental for drawing collective development objectives and strategies. Cooperatives helped
small producers to overcome scale limitations in commercialization, etc. Strong public support
was essential for getting things moving. And strong local/regional institutions proved to be able
to move ahead taking the lead role in governance even with less direct public support in the last
decade.
On the other hand, the producers of the aa LIPS of Par faced a similar governance conditions
when it comes to the global lead firms, that is to say, the same conditions of insertion in semi
hierarchical chains. The main difference is related to local governance. Costa describes how
institutional transformations created an environment of discontinuity and uncertainty. The
Amazon Development Agency (ADA), created in 2001 mobilized a set of promotion initiatives
based on LIPS, focusing on strengthening local protagonism and the construction of collective
perspectives and strategies for several LIPS, including the fruit processing one12.
The extinction of ADA and the change in the political scenario within the Superintendency for
the Development of the Amazon (SUDAM), re-created in 2003, changed policy priorities,
favoring traditional horizontal support policies and dismantling the LIPS specific efforts directed
to the strengthening of local governance. On the wake of market forces the LIPS underwent the
structural transformations described above, crowding out traditional small producers and
threatening the traditional extrativist fresh fruit production. This ends up undermining what we
can call social capital and raise doubts about the sustained competitiveness of the LIPS. If we are
worried about local development it is rather clear that the changing structure does not favor
income and job generation and the strengthening of social capital. Also the environment might be
at stake.
In sum, when comparing different trajectories of LIPS based on fruits production (even if
departing from the clusterGVC link perspective, as does Gomes) we find that the main
determinants for different trajectories are related to local/national knowledge pools and capacity
building processes, governance and state action. On an extreme stance, one could even interpret it
as the story of LIPS exposed to increased competitive pressures, where local assets were
critical for determining the capacity to succeed.
3.2. Experiences in Clothing and Footwear LIPS
The shoe production in Sinos Valley in the South of Brazil constitutes one of the most frequently
and in depth analyzed cases, either based on analytical framework of Clusters (Schmitz 1995,
1999; Humphrey and Schmitz 2002; Bazan et al. 2004) or on the LIPS framework (Vargas and
Alievi 2000; Vargas 2002). But its worth presenting a brief summary, once it presents many
parallels with other cases.
12

These involved the Federal University of Par (UFPA), the Federal Rural University of Amazonia (UFRA),
Embrapa/PA, the, the Brazilian Service of Support for Micro and Small Enterprises (Sebrae) and the Department of
Agriculture of the State of Par (Sagri).

20

This LIPS evolved along decades focusing both on the internal market and on export mostly to
United States and Europe. What distinguishes this case is that this growth was not based only on
cheap labor but also on product quality and the capacity to improve in timing of production and
delivery. These virtues are pointed out to be closely related the capabilities accumulated along
decades in a context of strong interaction and cooperation.
It constituted a major success story until the late 1980s, with rising number of firms and a
diversified local supplier and subcontractors network, as well as research and training
organizations and associations which were able to mobilize collective initiatives. The growth of
the LIPS was accompanied by a growing share of exports to developed markets and a growing
articulation to the value chains coordinated by big buyers in those countries. Since the 1960s and
1970s support initiatives helped local producers to take part of main trade fairs abroad and to
attract buyers to local fairs, establishing the channels for exports.
Since the late 1980s the growing presence of Chinese and other Asian countries in the
international shoe market with even lower wages challenged the producers of Sinos Valley. In
addition, global buyers increased their standards in terms quality and speed.
This context led to a progressive weakening of cooperative relations both of horizontal type
(competition for an increasingly contested market) and of vertical types (collaborative relations
with suppliers gave place to increased pressure for meeting standards and timing).
Being unable to compete with Chinese products based on costs, the producers of the Sinos Valley
engaged in an effort to improve in product quality, speed and product variety in order to reach
higher class markets a similar strategy pursued by the most diverse LIPS based on shoes and
clothes production throughout the country. To some extent, this has been successfully achieved
by local producers. But once Asian producers also engaged in rapidly climbing the quality/value
letter this would not suffice.
The joint initiative of the Shoes from Brazil Programme aimed at investing more in design and
developing a collective image and a brand for Brazilian shoes, setting the basis for a more
independent action in the international market. But this initiative was not sufficiently supported
by some of the large firms, which had already engaged in captive relations with a large US buyer,
to which they exported almost all their production. The collaboration among these big local
producers was limited to production, while the marketing function of the lead firm was not
challenged13.
This processes if well described by Vargas and Alievi (2000):
"If in the 1970s horizontal and multilateral cooperation promoted by local support organizations
was crucial for opening foreign markets, in the 1980s the exporters became of key importance for
organizing the productive and innovative activities of the LIPS. Thus, cooperation schemes
between actors inside the LIPS showed a steady decline as the largest shoe companies began to
seek greater interaction with foreign buyers in detriment of cooperation with their local
counterparts

13

New players emerged in the LIPS like export agents, which operate exclusively as buying offices of big chains like
Wall-Mart and Pay-Less.

21

The effect is a scenario of increased competitive pressure, the loss of capabilities and
opportunities for improving own design and branding, squeezed profit margins and growing
unemployment.
The unsustainable aspect of the strategy of captive insertion in GVC is well pictured by Schmitz
(1999):
Instead some of the leading enterprises are digging themselves deeper into fighting the
production battle by establishing new plants in the Northeast of Brazil, a region whose only
advantages are low labor costs and tax exemptions. These advantages are transient because the
competitors of the Sinos Valley are doing the same. Italian clusters are extending into Romania
and Taiwanese manufacturers are setting up plants in Vietnam - in order to have a low-wage
alternative to China. It seems a race to the bottom, in which competition is over which enterprises
pay the lowest wages and which municipality can forego the most tax income.

Variations of the same story can be found in other LIPS in the country. Two contrasting cases in
clothing production LIPS are depicted in the studies of Peixoto (2005) and Cardoso (2006). One
of them is characterized as the Fashion production LIPS in Niteri and the other is based on
swimwear production in Cabo Frio, both cities in the state of Rio de Janeiro.
Both are LIPS that evolved with focus on the local and later national market and that engaged in
international markets in the decade of 2000. Local capabilities and interactive learning processes
were important for improving quality and design, leading both cases to be recognized by their
own specific style and design.
State support organizations were important for helping these LIPS to consolidate and have been
also provided main stimulus for them to go international. Their participation in the Rio Fashion
Week and in the associated trade fair Rio Fashion Business helped to set the links with European
and North American buyers. The main difference when it comes to their strategy for
internationalization is related to strategic independence.
The firms of Niteri invested heavily in design and branding and gradually specialized on those
activities while outsourcing production to many firms in the metropolitan area of Rio de Janeiro.
Although limited in volume, these firms have been successfully exporting their branded product
to high end consumers.
The LIPS of swimwear of Cabo Frio was object of mayor support initiatives. The support
organization for small and medium enterprises (SEBRAE) promoted the creation of an export
consortium with eight local producers. Consultants were hired for developing a specific product
line based on local identity, which was then produced and commercialized by the consortium to
foreign costumers. But even with these efforts in design the products were exported on a private
label basis, i.e. foreign buyers put their own brand on the products. These firms faced two major
problems. First, they faced problems for meeting speed requirements in delivery. Second, the
demand oscillated according to the buyers strategy in response to changes in fashion and other
market conditions. Once the firms of the consortium had committed to a type of design which is
not compatible with the demand in the national market, they faced difficulties for maintaining the
scale of sales and revenues. In addition, the insertion in these markets involves standardization
22

and investment in specific machinery. As a consequence of problems with working capital half of
the firms were forced to close doors.
In sum, even if marked by strong cooperation relations, by intense local capacity building and
ample support of public organizations, this strategy flopped. The good intended export support
initiative was equivocated because it put the firms in a captive position within the international
value chain without investing in the firms capacity to develop own design and branding. The
resulting lock-in situation led the firms to closure.
3.3. Idealization of LIPS for international competitive insertion the Paragominas Wood
and furniture LIPS
Based on a partnership between the SEBRAE and the Inter-American Development Bank (IDB) a
project was started for developing a methodology for the promotion of LIPS, with consultancy
from the PROMOS agency, connected to the Chamber of Commerce, Industry and Crafts of
Milan. The project, implemented between 2002 and 2006, focused on for pilot cases, one in
footwear production in Campina Grande (Paraba), two in Clothing production, Tobias Barreto
(Sergipe) and Nova Friburgo (Rio de Janeiro), and one in wood and furniture production in
Paragominas (Par). We briefly analyze the last one, based on the studies of Mendes et al (2006)
and Costa and Andrade (2008).
The wood and furniture LIPS of Paragominas consists of timber companies that benefit wood for
the domestic market and for export, and furniture companies.
The main objectives of the PROMOS project, which was implicitly based on the concept of
Industrial Districts were: to spread the associative culture; to seek the improvement of enterprise
management, product quality and increased productivity; and access new markets, including
internationalization. It turned out to be a great intervention operation with strategic planning,
outlined goals, precise targets to be achieved, central management and engineering for obtain
resources. The total cost of the operation is estimated at R$ 13.8 million14 to be invested over
three years.
Based on the benchmark oriented analysis of the LIPS the main programmed actions to impact on
some micro and small producers focused on the local market were: create an industrial park;
implementation of serial production; promoting the vertical integration of production. These
initiatives depended on large volumes of fixed investment: engineering project and technology
and equipment. Serial production implied in investments in technological adaptation, layout
review, planning, PCP and improvement of the production process and logistics in order to
enable the installation of the company in the industrial park.
Thus, the aim was to expand supply through the raise of production scale and productivity gains.
The strategy foresaw that business owners should bear with 83% of the costs associated to the
implementation of serial production and to vertical integration. Considering the small size
and of the furniture producers it was not so probable that these firms would be able to bear the
burden of change (in terms of technological and their location)?
14

At the 2006 average exchange rate this would make around US$ 6.3 million.

23

Following the proposed strategy, the LIPS went trough major transformation both in the
economic sphere and in the sphere of local interactions, cooperation and formation of social
capital. Costa and Andrade (ibid) created some indexes for expressing these transformations,
which are presented in the next figure.
As can be depicted from the first graph, apart from the rise of output and sales variables in the
first period, the LIPS underwent a sharp and continuous decline of all economic performance
variables. Salaries fell throughout the whole period that is portrait. This crisis has two
components. One seems to derive from increased physical productivity. On the one side, local
market is limited and on the other side there was little success in expanding markets in the
country and abroad, given the fierce competition that exists. Thus, prices fell to such an extent
that total revenue came down. The second component of the crises is associated with the supply
conditions of the raw material. Given the pressure on the wood market, the relative share in the
cost of raw materials grew steadily 1.13% for each observation point.
Figure 3 Indicators of economic and social capital performance in Paragominas LIPS
Economic Efficiency
140
130

(2002=100)

120
110
100
90
80
70
60
jun/04

Jun04/Dec04

Output per worker (m3)

Dec04/Jun05

Total Sales (Month)

Jun05/Dec05
Total Salaries

Dec05/Jun06
Sales per worker

(2002=100)

Cooperation and Social Capital

450
400
350
300
250
200
150
100
50
0

Propensity for productive cooperation

Participation in colective actions

Composite index (Social Capital formation)

Source: Costa and Andrade (2008)

24

The second graph reflects one of the other main goals of the program, to spread the associative
culture. Given responses to field research in which local firms were asked about their
commitment to productive collaboration and about their effective participation in collective
actions, Costa and Andrade (ibid) elaborated a composite index, which he suggests can be seen as
a proxy for the level of social capital. Two clear phases can be observed. The first, with rising
statistics, is associated to the initial enthusiasm provoked by the implementation of the program
and its ambitious promises. The second phase reflects the relative disappointment of local firms
about the outcomes, in terms of economic performance, and the future perspective for the LIPS.
But it also reflects the unwillingness of actors to engage in productive cooperation which might
lead to continuous expansion of output.
Costa and Andrade conclude that there seems to be high risk for a great number of actors in the
LIPS. As he suggests, this experience can be characterized as an attempt to create the perfect
LIPS (an industrial district), once faced with the imperfect LIPS reality insists to present. A
LIPS fitted for competitive insertion in national and international markets. As stressed by Lastres
and Cassiolato (2005: 9): attempts of that kind lead to spending of ...a significant amount of
resources attempting to do the impossible, i.e. create (artificially) local specific social
constructs, by bringing in a preformed and exogenous technological and organizational package.
This is done based on the main header of competitive international insertion. The study of Melo
and Hansen (2004) on the Clothes production LIPS of Tobias Barreto, one of the other three pilot
cases of this program, showed that the support organizations faced major resistance for
implementing the proposed initiatives, which they assign to the difficulty of local actors to
engage in cooperation. Eventually it was rather a question of coherence.

4. Conclusion
This paper discussed the main shortcomings of the GVC literature based on the conceptual
framework of IS and LIPS. It is important to stress that the recognition of changing pattern of
global economic systems and the creation of international or global supply chains controlled by
leading enterprises is a important contribution, which has to be taken into account both for
analytical and for policy purposes. Our critical perspective to the GVC literature means not that
these issues should be downplayed. Rather, at the very foundation of the literature on innovation
and development and on innovation systems we find very comprehensive analysis of the
changing international scenario, like in the work of Chesnais, Nelson and Winter, Freeman,
Lundvall, amongst others. Inspired by these and many other contributions, like the LatinAmerican tradition on development, the LIPS framework explicitly takes into account the
intrinsic connection of the local, with the national and international sphere.
From one point of view, considering an exclusively empirical perspective, some contributions like those of Schmitz and colleagues - that discuss the GVC-cluster link are very useful as far as
they shed light on the concrete challenges faced by firms to insert into these international chains.
But, from another point of view, these contributions could be interpreted as a discussion of which
details went wrong for not allowing a successful insertion, which should be expected. Thus,
25

implicitly maintaining the main normative perspective that inserting in these chains is the main
positive option for firms in LDCs.
In the bulk of the GVC literature the fashioned normative perspective holds that the best option
for firms from LDCs is to insert in GVC because there are differentiated chances for learning and
upgrading. Thus, this would be a straightforward strategy for development. To a great extend
this perspective is connected to main conceptual shortcomings.
Our analysis is based in results of some studies of RedeSist in the fruit and wood processing
sectors and the apparel industry. The implications derived from the analysis however go beyond
these sectors as evidence raised by RedeSist in other economic activities ranging from health to
air space seems to corroborate them15.
Misunderstanding of the complexity of learning and innovation processes may lead to the
conception that international links might be a main driver for capacity building. This is rather a
simplistic mainstream textbook view of technology. The cases of fruit production and footwear
LIPS show that capacity building is a social and cumulative process. As contributions since the
first Globelics conference stress there is a lot of knowledge needed in order to be able to learn.
The concrete cases where we find successful insertion into international markets were based on
complex local networks and institutions and on long run local and national trajectories of
knowledge accumulation. Thus, it is just the other way around. Significant accumulation of local
and national capabilities enabled some additional improvement related to attending standards of
developed countries. It is not the Greenfield efforts to cope with international requirements that
will enable basic local capacity building. Thus, the GVC normative prescriptions hold some
interesting similarity with the naive (or not) technology transference argument in the original
TRIPS documents.
This is connected to the simplistic way the GVC leads with the territory or to the fact that it is
almost completely overlooked. All cases presented show that specific historical trajectories
shaped each LIPS and the firms within them. The stance of not considering social, cultural,
institutional and even natural aspects may help to explain why attempts of international insertion
went wrong (swimwear LIPS in Cabo Frio or wood and furniture LIPS in Paragominas) or were
not even taken forward (garment LIPS in Tobias Barreto). As the above mentioned cases show,
learning trajectories which helped firms to stand international competition pressure were strongly
shaped by local institutions, the cognitive territory and state support.
From the stance of global lead firms, the ideal scenario would be to push aside specificities of
localities and countries and to create a situation of textbook perfect competition. Once all
suppliers implemented the mandatory technological package the competition among them would
be based on price. Those cases that tried to move in this direction and to a great degree succeeded
(like in the Sinos Valley) found themselves in this low road dead end. In opposition, the
experiences of high road competitive international insertion (fashion LIPS of Niteri, aircrafts
LIPS of So Jos dos Campos) happened due to the capabilities previously built in core
competences of chains such as branding for apparel chains or R&D for high technology products
15

See the papers by Szapiro et al. and by Podcameni et al. submitted to the 2015 Globelics conference. Other
evidence will be presented and further analyzed in future work of RedeSist.

26

chains, getting in direct contact with retailers or final consumers. In fact, previously to the
insertion in international markets, these crucial capabilities were built involving a multitude of
local actors such as firms, institutions, universities and government. As firms from the Sinos
Valley attempted these functional upgrading, for using the terms of the GVC literature, they
were actively blocked.
The high road cases just mentioned were based on a structure of relations that the GVC
literature would characterize as the market type or the modular type of governance, where power
asymmetry is lower or not relevant and value appropriability is likely to be less uneven. This
seems as a way to keep a concept alive where it has no room. Talking about global value chain
makes only a sense in those cases were you have an organized chain, where there are asymmetric
power relations. If we are talking about arm's length market links with symmetric relations it is
not necessary to talk about GVC.
Thus, GVC are only really relevant when issues of power come in. The governance concept in
the GVC literature is used as a surrogate for power. Power relations that are crucial for the
determination of all relations along the value chain are then restricted to the more soft notion of
governance. Two main problems arise from this.
First, the soft concept of governance leaves aside the perception that power relations are by
nature uneven and serve specific interests. The interest of global leaders is neither to strengthen
potential competitors nor to promote third world development. The rise of competitors threatens
their price and quality discrimination strategies and revenues. Not by change attempts to improve
on branding and marketing are actively undermined. Developed third world societies would
imply in rising patterns of wages that would put on stake the consumption patterns of developed
countries. If this is not considered, there is little need for the state in this theory. In contrast, in all
success stories there was an entrepreneurial state backing local firms. Thus, different to what the
GVC literature suggests there is a call for a profound discussion about industrial and STI policies.
Second, this notion of governance is circumscribed to the link between the global players and the
local firms. Local/national governance and power structures might conflict with those one
disrupting local coherence. If the bulk of the IS literature stresses the importance of cooperation
and learning links, which are strengthened by trust and mutual commitment, this seems not to be
a conducive way for long run sustained development. The cases of the Sinos Valley and of
Paragominas attest that.
Without a focus on these managed (governed) creativedestructive dynamics, however, GCC
practitioners are vulnerable to charges of developmentalism the assumption of universality
(all countries can achieve development) (Dunaway and Clelland, 1995; Smith, 1985). In the
GCC approach, this comprehension of development often rests upon a double fallacy: of
composition (what is good for one unit as an upgrading strategy is good for all units) and of
comparison (if one unit can upgrade, so can all units). It also rests on a residualist conception of
economic development, where lack of development is explained by exclusion (from the
world market, capitalism or globalization), to be remedied by inclusion. (Selwyn 2015,
p.256)

27

What is the main corollary of this discussion? Expanding markets, going international is by no
instance bad. It might be a very important strategy for firm growth. But there are broadly
speaking two main patterns of international insertion. One is based on asymmetric insertion in
GVC structures. Most evidences show that this is related to some level of captivity and sooner or
later you might not be the preferred child anymore and find yourself in a lock in, unless you
manage to do the critical jump16. The second pattern is based on some level of strategic
independence, case in which the conceptual framework of GVC loses relative importance.
Successful experiences are based on capabilities accumulated along specific trajectories, which
are mostly linked to interactions with firms, costumers, research and education organizations and
other actors (mostly at the local and national level, but not disregarding also the international
level) and directly influenced by social, cultural and institutional settings and policy action.
Thats where the innovation system literature shows its expertise and calls for in depth
discussions on STI policy for building local and national capacity instead of putting faith on
simplistic normative propositions.

5. References
ABERNATHY, W.; UTTERBACK, J. (1978) Patterns of industrial innovations. Technological Review, 80(7):2-29.
AROCENA, R.; SUTZ, J. (2003) Learning divides, social capital and the roles of universities. 1st Globelics Conference,
Rio de Janeiro, Brazil.
BAIR, J. (2005), Global Capitalism and Commodity Chains: Looking Back, Going Forward. Competition & Change,
9(2):153-180.
BARRIENTOS, S.; GEREFFI, G.; ROSSI, A. (2011) Economic and social upgrading in global production networks: A
new paradigm for a changing world. International Labour Review, 150(3-4):319-340.
BAZAN, L.; NAVAS-ALEMN, L. (2004). The underground revolution in the Sinos Valley: a comparison of upgrading
in global and national value chains. In: Schmitz, H. (Ed.) Local enterprises in the global economy: Issues of
governance and upgrading, 3:110139.
BERNARDES, R. (2000) Redes de inovao e cadeias produtivas globais: impactos da estratgia de competio da
Embraer no arranjo aeronutico da regio de So Jos dos Campos. In: Arranjos e Sistemas Produtivos Locais e as
Novas Polticas de Desenvolvimento Industrial e Tecnolgico. RedeSist-IE/UFRJ.
BORRUS, M.; ERNST, D.; HAGGARD, S. (2000) Cross-Border Production Networks and the Industrial Integration of
the Asia- Pacific Region. In: Borrus, M.; Ernst, D.; Haggard, S. (Eds.), International Production Networks in Asia.
Rivalry or Riches?, Routledge, London.
BOURDIEU, P. (1987) What makes a social class? Berkeley Journal of Sociology, 22:1-18.
BOURDIEU, P. (1989). O poder simblico. Lisbon/Rio de Janeiro: Bertrand.
BRITTO, J. (2004). Cooperao e aprendizado em arranjos produtivos locais: em busca de um referencial analtico.
Technical note n. 4 for the project Projeto de Pesquisa Aprendizado, capacitao e cooperao em arranjos
produtivos e inovativos locais de MPEs: implicaes para polticas.
BRITTO, J.; VARGAS, M. (2015). O ASPIL de Petrleo e Gs em Maca. In: Matos, M.; Borin, E.; Cassiolato, J.E.
(Eds.). Polticas estratgicas de inovao e mudana estrutural: Uma dcada de evoluo dos Arranjos Produtivos
Locais. Rio de Janeiro: E-papers.
CARDOSO, F. (2006). A influncia da exportao no desenvolvimento de arranjos produtivos locais de moda no estado
do Rio de Janeiro. Master Thesis, EBAPE/FGV, Rio de Janeiro, Brazil.
CASSIOLATO, J.; LASTRES, H. (Eds.) (1999) Globalizao e inovao localizada: Experincias de Sistemas Locais no
Mercosul. Braslia: IBICT/IEL.
16

In Asian cases were firms became players at the international sphere, one could say that this happened in spite of
GVC lead firms and not thanks to them, once local firms underwent much pressure and attempts to block their
expansion. Many of these attacks have been mobilized in the sphere of IPR law suits. And their critical jump was to
a great extend only possible because of capacities build within national and local innovation systems actively backed
by the state.

28

CASSIOLATO, J.; LASTRES H. (2008) Discussing innovation and development: converging points between the Latin
American school and the innovation systems perspective. Globelics Working Papers Series, Working Paper 08-02.
CASSIOLATO, J.; LASTRES, H.; MACIEL, M. (2003) Systems of Innovation and Development: Evidence from Brazil.
Edward Elgar. Cheltenham, UK. Northampton, MA, USA.
CASSIOLATO, J.; MATOS, M.; LASTRES, H.; MARCELLINO, I. (2012) Innovation Systems and Development: the use
of the IS framework along the first ten years of the Globelics conference. 10th Globelics Conference. Hangzhou,
China.
CASSIOLATO, J.; MATOS, M.; LASTRES, H. (2013) Innovation Systems and Development. In: CURRIE-ALDER, B.;
KANBUR, R.; MALONE, D.; MEDHORA, R. (Eds.). International development: Ideas, Experience, and Prospects.
IDRC, Oxford: Oxford University Press.
CASTILHO, M.; ARENHARDT, M.; LE BOURLEGAT, C. (2009) Cultura e identidade: os desafios para o
desenvolvimento local no assentamento Aroeira, Chapado do Sul, MS. Interaes, 10(2):159-169.
COSTA, F.; ANDRADE, W. (2008). Mudana institucional e path dependency: as polticas para arranjos produtivos
locais no Par. In: CASSIOLATO, J.; LASTRES, H.; STALLIVIERI, F. (eds.) Arranjos Produtivos Locais: uma
Alternativa para o Desenvolvimento: Experincias de Poltica. Rio de Janeiro: E-papers.
COSTA, F.; FERNANDES, D.; SOUZA, C.; NACIF, M. (2015). A dinmica do APL de Frutas do Nordeste Paraense e da
Regio Metropolitana de Belm. In: Matos, M.; Borin, E.; Cassiolato, J. (Eds.). Polticas estratgicas de inovao e
mudana estrutural: Uma dcada de evoluo dos Arranjos Produtivos Locais. Rio de Janeiro: E-papers.
DICKEN, P. (2003) Global Shift: Reshaping the Global Economic Map in the 21st Century. 4th ed. London: Sage
Economy, Global Networks, 1(2): 89112.
DISTELHORST, G.; HAINMUELLER, J.; LOCKE, R. (2014) Does Lean Improve Labor Standards? Capability building
and social performance in the Nike Supply Chain. Management Science.
DUNAWAY, W., CLELLAND, D. (1995) Review of commodity chains and global capitalism. Journal of World Systems
Research. Available online at: http://jwsr.ucr.edu/archive/vol1/v1_r5.php.
DUSSEL PETERS, E. (2008) GCCs and Development: A Conceptual and Empirical Review. Competition and Change,
12(1):1127.
FAJNZYLBER, F. (1988) Competitividad internacional: evolucin y lecciones. Revista de La CEPAL, Santiago, Chile,
Naes Unidas, n. 36.
FREEMAN, C. (1982) Technological infrastructure and international competitiveness. Draft paper submitted to the OECD
ad hoc group on science, technology and competitiveness, Paris, OECD.
FREEMAN, C. (1987) Technology Policy and Economic Performance Lessons from Japan. London: Frances Printer.
FREEMAN, C. (1995) The National System of Innovation in historical perspective. Cambridge Journal of Economics,
19:5-24, Cambridge, England.
FREEMAN, C. (1999). Innovation systems: city-state, national, continental and sub-national. In: CASSIOLATO, J. E.;
LASTRES, H. M. M. (ed.). Globalizao e inovao localizada: experincias de sistemas locais no mbito do
Mercosul. Cap. 3 (pp. 109-167). Braslia: IBICT/MCT. 799 p.
GEREFFI, G. (1999). International trade and industrial upgrading in the apparel commodity chain. Journal of
International Economics.
GEREFFI, G. (2014) A Global Value Chain Perspective on Industrial Policy and Development in Emerging Markets.
GEREFFI, G; KORZENIEWICZ, M (Eds.) (1994) Commodity Chains and Global Capitalism. Westport, CT, Praeger.
GEREFFI, G.; HUMPHREY, J.; STURGEON, T. (2005). The governance of global value chains. Review of International
Political Economy, 12(1):78104.
GOMES, R. (2006). Upgrading without exclusion: lessons from SMEs in fresh fruit production clusters in Brazil. In:
Pietrobelli, C.; Pietrobelli, R. (Eds.). Upgrading to Compete Global Value Chains, Clusters, and SMEs in Latin
America. Inter-American Development Bank, Washington D.C., United States.
HOPKINS, T. (1977) Notes on class analysis and the world-system. Review (Fernand Braudel Center), p. 67-72.
HUMPHREY, J.; SCHMITZ, H. (2000) Governance and upgrading: Linking industrial cluster and global value chain
research. IDS Working Paper No. 120, Institute of Development Studies, University of Sussex, Brighton.
HUMPHREY, J.; SCHMITZ, H. (2002) How does insertion in global value chains affect upgrading in industrial clusters?
Regional Studies, 36(9):1017-1027.
JOHNSON, B.; LORENZ, E. and LUNDVALL, B. (2002) Why all this fuss about codified and tacit knowledge? Industrial
and Corporate Change, 11(2):245-262.
MELO, R.; HANSEN D. (2004). Arranjos produtivos locais de micro e pequenas empresas: o arranjo produtivo de
confeces de Tobias Barreto- SE. UFS.
LASTRES, H.; CASSIOLATO, J. (2002) Systems of innovation and development from a South American perspective: a
contribution to Globelics 1st Globelics Workshop, Aalborg University, 4-6 November.
LASTRES, H.; CASSIOLATO, J. (2005). Systems of innovation, clusters and industrial districts: analytical and policy
implications of convergence and differences in the approaches. 3rd Globelics Conference South Africa, Pretoria.

29

LIMA, V.; MARINHO, M.; BRAND, A. (2007). Histria, identidade e desenvolvimento local: questes e conceitos.
Histria & Perspectivas, 36-37:363-388.
LUNDVALL, B. (1985) Product Innovation and User-Producer Interaction. Aalborg, Aalborg University Press.
LUNDVALL, B (1988). Innovation as an interactive process from user-producer interaction to national systems of
innovation. In: Dosi, G.; Freeman, C.; Nelson, R.; Silverberg, G.; Soete, L. (Eds.). Technical change and economic
theory. pp. 349-367. London: Pinter.
LUNDVALL, B. (Ed.) (1992) National Innovation Systems: Towards a Theory of Innovation and Interactive Learning.
London: Pinter Publishers.
LUNDVALL, B. (2007) Innovation System Research and Policy: where it came from and where it might go. Paper to be
presented at CAS Seminar, Oslo. December 4.
LUNDVALL, B.; JOHNSON, B. (1994). .The learning economy. Journal of Industry Studies, 1(2):23-42.
LUNDVALL, B.; JUROWETZKI, R.; LEMA, R. (2014) Combining the Global Value Chain and the Innovation System
perspectives: A new agenda for Globelics research? 11th Asialics Conference, Daegu, South Korea.
MATOS, M.; BRITTO, J. (2011) Innovation, preservation and sustainability in cultural activities: an exploratory analysis
based on the Local Innovative and Productive Systems framework. 9th Globelics Conference, Buenos Aires,
Argentina.
MATOS, M.; BORIN, E.; CASSIOLATO, J. (Eds.). (2015). Polticas estratgicas de inovao e mudana estrutural: Uma
dcada de evoluo dos Arranjos Produtivos Locais. Rio de Janeiro: E-papers.
MENDES, F.; FERREIRA, H.; DALLEMOLE, D. (2006). Fortalecimento e Consolidao dos Distritos Industriais Plo
de Madeira e Mveis de Paragominas PA. Partial Report 5a. Phase. Belm, UNAMA/FIDESA
MENKHOFF, T. (1992) Xinyong or How to Trust Trust? Chinese Non-Contractual Business Relations and Social
Structure: The Singapore Case. Internationales Asienforum, 23(12):26188.
MEYER-STAMER, J.; MAGGI, C.; SEIBEL, S. (2004) Upgrading in the tile industry of Italy, Spain and Brazil: insights
from cluster and value chain analysis. In: Schmitz, H. (2004) (Ed.) Local enterprises in the global economy: Issues
of governance and upgrading. Edward Elgar Publishing.
MILBERG, W. (2008) Shifting sources and uses of profits: Sustaining U.S. financialization with global value
chains, Economy and Society, 37(3):420-451.
MORRISON, A.; PIETROBELLI, C. and RABELLOTTI, R. (2008) Global Value Chains and Technological Capabilities:
A Framework to Study Industrial Innovation in Developing Countries. Oxford Development Studies, 36(1):39-58.
MYTELKA, L.; FARINELLI, F. (2003) From Local Clusters to Innovation Systems. In: Cassiolato, J. E; Lastres, H. M. M.
and Maciel, M. L. (Eds), Systems of Innovation and Development, Evidence from Brazil. London: Elgar.
NELSON, R. (1993). National innovation systems: a comparative analysis. University of Illinois at Urbana-Champaigns
Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
NELSON, R.; WINTER, S. (1982) An Evolutionary Theory of Economic Change. Havard University Press, Cambridge,
MA, United States.
PEIXOTO, F. (2005) O Local e os Sistemas de Inovaes em Pases Subdesenvolvidos: o caso do APL de moda praia de
Cabo Frio/RJ. Master Thesis, Federal University of Rio de Janeiro, Brazil.
PIETROBELLI, C.; RABELLOTTI, R. (2006) Upgrading to Compete Global Value Chains, Clusters, and SMEs in Latin
America. Inter-American Development Bank, Washington D.C., United States.
PIETROBELLI, C.; RABELLOTTI, R. (2008) Innovation Systems and Global Value Chains. 6th Globelics Conference,
Mexico City, Mexico.
PIETROBELLI, C.; RABELLOTTI, R. (2009) The global dimension of innovation systems: linking innovation systems
and global value chains. In B. Lundvall; K.J. Joseph; C. Chaminade and J. Vang (2009) (Eds.) Handbook of
Innovation Systems and Developing Countries: Building Domestic Capabilities in a Global Setting. Edward Elgar
Publishing Limited.
RAFFESTIN, C. (1993). Por uma geografia do poder. Trad. Maria Ceclia Frana. So Paulo: tica.
RAIKES, P.; JENSEN, M; PONTE, S. (2000). Global Commodity Chain Analysis and the French Filire Approach:
Comparison and Critique. Economy and Society 29:390417.
REINERT, E. (1996) The role of technology in the creation of rich and poor nations: underdevelopment in a
Schumpeterian system, in: Aldcroft, D.; Ross, C. (eds.) Rich nations Poor nations. The long run perspective.
Aldershot: Edward Elgar.
ROBINSON, W. (2010) Global Capitalism Theory and the Emergence of Transnational Elites. Working Paper n 2010/02,
UNU-WIDER.
SANTOS, M. (1996). A natureza do espao: tcnica e tempo, razo e emoo. So Paulo: Hucitec.
SANTOS, M. (2000). Por uma outra globalizao - do pensamento nico conscincia universal. So Paulo: Record.
SCHMITZ, H. (1995) Small shoemakers and Fordist giants: tale of a supercluster. World Development, vol 23 (1):9-28.
SCHMITZ, H. (1998) Responding to global competitive pressure: Local cooperation and upgrading in the Sinos Valley,
Brazil. IDS Working Paper No 82, Institute of Development Studies, University of Sussex, Brighton.

30

SCHMITZ, H. (1999) Global Competition and Local Cooperation: Success and Failure in the Sinos Valley, Brazil. World
Development, 27(9):1627-1650.
SCHMITZ, H. (2004) (Ed.) Local enterprises in the global economy: Issues of governance and upgrading. Edward Elgar
Publishing.
SELWIN, B. (2013) Social Upgrading and Labour in Global Production Networks: A Critique and an Alternative
Conception. Competition and Change, 17(1):7590.
SELWYN, B. (2015) Commodity chains, creative destruction and global inequality: a class analysis. Journal of Economic
Geography, 15(2):253-274.
SERRA, A. (1613). Breve trattato delle cause che possono far abbondare li regni doro e argento dove non sono miniere,
Naples, Lazzaro Scoriggio.
SMITH, T. (1985) Requiem or new agenda for third world studies? World Politics, 37: 532561.
VARGAS, M. (2002) Proximidade territorial, aprendizado e inovao: Um estudo sobre a dimenso local dos processos
de capacitao inovativa em arranjos e sistemas produtivos no Brasil. Doctor Thesis. Federal University of Rio de
Janeiro, Brazil.
VARGAS, M.; ALIEVI, R. (2000) Arranjo produtivo coureiro-caladista do Vale dos Sinos/RS. Rio de Janeiro:IE/UFRJ,
2000.
VELOSO FILHO, F.; SOUZA, D.; AQUINO, C.; MOURA, S. (2004) Estudo dos arranjos produtivos locais da apicultura
no Estado do Piau (Picos e Teresina). Rio de Janeiro: RedeSist/IE/UFRJ (Technical Note).
WALLERSTEIN, I. (1983) Historical Capitalism with Historical Civilization. Verso.
WILLIAMSON, O. (1979) Transaction-Cost Economics: The Governance of Contractual Relations. Journal of Law and
Economics, vol. 22, pp. 233-261.
WORLD BANK. (2010) Value Chains in a Postcrisis World: Resilience, Consolidation, and Shifting End Markets.
Washington, DC: World Bank.

31