Abstract
The introductory chapter illustrates the relevance of (research on) global value chains (GVCs) in sub-Saharan Africa. It provides an overview of the state of the art, and outlines the structure of the edited volume. Five key features of GVCs are identified, and the respective chapter contributions summarised: first, governance institutions and their policies are critical for the dynamics of GVCs and their impact on economic development. Second, GVCs are diverse, which has far-reaching implications for both economics and politics. Third, regional value chains have recently gained considerable political relevance, arguably being an alternative to value chains of a global scope. Fourth, the political and socio-economic effects of GVC participation merit more attention too. Fifth, there is a need to consider the sub-national dimension of GVCs, particularly the roles of cities and city regions.
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Sub-Saharan Africa is reasonably integrated into the global economy—but not on favourable terms. It still by and large exports primary commodities while importing manufactured goods and high-value services. The region’s role in manufacturing global value chains (GVCs) is limited to the supply of metals and minerals. The countries of sub-Saharan Africa trade little with each other and regional value chains (RVCs) are, for the most part, undeveloped. Nevertheless, since the turn of the last century, stronger economic growth and closer political integration have led to promising new developments and a more optimistic outlook. While serious obstacles still remain, these emerging dynamics now deserve more detailed investigation.
The volume includes a selection of papers presented at the conference on ‘Value Chains in the Global South: Challenges of Integration into the Global Economy’, held in Stellenbosch, South Africa, in October 2017. The conference focussed on GVCs, which are not only a real-world phenomenon but also a key analytical concept—one that has proven particularly helpful in the study of the integration of the Global South into the world economy. For several years now, there has been considerable interest in applying this concept to sub-Saharan Africa. International organisations increasingly rely on GVC analyses in their policy-oriented publications (FAO 2014; OECD 2014; Subramanian and Matthijs 2007). A number of universities have started corresponding research programmes too.Footnote 1
The interest in GVCs in sub-Saharan Africa has been matched by numerous recent scientific publications, mostly journal articles illustrating to what extent individual countries or places on the sub-national scale benefit from the export of raw materials—and also how they could industrialise by domestically converting these resources into (semi-)manufactured products (Dannenberg and Nduru 2013; Fessehaie 2011; Franz 2014; Fuchs and Tessmann 2016; Hanlin 2011; Teka 2011). Recent books have addressed such topics as job creation in agricultural GVCs and local spillovers from foreign direct investment (Dudwick et al. 2013; Farole and Winkler 2014); or, narrowing the scope further, the impact of new information technologies on GVCs in South Africa and Tanzania (Murphy and Carmody 2015). Books that provide broader assessments—like the compilation of cases of failure and success by Gibbon and Ponte (2005) for example—are scarce however. What is more, research on GVCs is marked by a sharp contrast between the overly optimistic expectations voiced in the aforementioned policy-oriented publications by international organisations, on the one side, and the mostly critical assessments by scholars standing in the tradition of world-systems analysis (which seeks to uncover exploitative relations among the periphery, semi-periphery and cores of the world economy), on the other.
Against this background, our book provides new empirical evidence that reveals both the bright and dark sides of GVCs in the Global South. Comprising a total of 15 empirical chapters, this volume brings together analyses of sectors as diverse as e-waste, grape farming, hydrocarbons and information technologies, revealing similarities and differences with regard to the various dynamics that corresponding GVCs trigger—as well as often highlighting the critical role of public policies, or the state, for GVCs. We also broaden the perspective taken by analysing RVCs in Part I of this volume. RVCs have gained significant relevance for the political visions of a number of countries—for example, South Africa and Tanzania—but lack adequate scientific attention, at least in the sub-Saharan African context. Standard cases of GVC research, meaning value chains that are of a global scope (for instance, Ethiopia’s apparel export sector and Mozambique’s megaproject-based economic model), are assessed in Part II. In Part III, the book sheds light on the political and socio-economic challenges relating to the participation of sub-Saharan Africa in GVCs. It brings research on GVCs together with that on cities and city regions in Part IV.
Further to the aforementioned recent publications, research on GVCs—in particular regarding the Global South—represents a long-standing tradition in Economics and Economic Geography, although the term itself gained prominence only during the course of the 1990s. About 20 years earlier, scholars such as Dicken (1976), Firn (1975) and Watts (1981) showed that transnational companies were relocating specific segments of their GVCs to ‘branch plants’ in developing countries. These segments were labour-intensive, and required considerable investments being made in production facilities; they were hardly sophisticated in terms of technology, however. The segments decisive for economic development remained in the Global North. This pattern began to change in the early 1990s, with increasingly independent production facilities in the Global South becoming responsible for ever-more complex tasks. These ‘performance plants’ partnered with local suppliers and supported the upskilling of local labour, contributing to on-site economic development (Phelps and Fuller 2000; Phelps et al. 2003; Turok 1993).
Branch plants and performance plants are still being established today, meaning that not every location in the Global South that participates in GVCs benefits from significant impulses for economic development. Leaving aside precursors such as the French filière approach (Benoit-Cattin et al. 1996; Lauret 1983) and Porter’s (1985, 1990) publications on GVCs, research that seeks to explain whether participation in GVCs facilitates economic development dates back originally to the edited volume Commodity Chains and Global Capitalism as well as numerous related studies (Gereffi 1999, 2014; Gereffi et al. 2005). In addition to the input–output dimensions of GVCs, the institutional and territorial embeddedness of participating firms as well as the power relations between all involved actors are analysed. Assessing these four dimensions allows conclusions to be drawn with regard to upgrading processes, which are the foundation for local economic development.
Criticising the supposedly narrow focus of the GVC approach on what happens along chains of production and commercialisation, researchers from Manchester and Singapore have advanced global production networks (GPNs) as an alternative concept. By using a network heuristic, the GPN approach examines the whole range of actors that surround value chains. It distinguishes between value creation, capture and enhancement (Henderson et al. 2002). Economic development in networks is explained through the specificities of processes of ‘strategic coupling’, which bring together local and non-local firms (Coe et al. 2004; Coe and Yeung 2015; Yeung 2009, 2015, 2016). In particular institutions are better covered by the GPN framework, whereas the GVC approach privileges intra-chain governance. As a consequence the territorial embeddedness of GPNs addresses various context factors that tend to be neglected in research on GVCs, as highlighted in Chap. 11 of this book. Indeed, numerous scholars have called for a more elaborate notion of territorial embeddedness in research on GVCs (Dussel Peters 2008; Henderson et al. 2002; Neilson et al. 2014). Some contributions have provided valuable extensions of the GVC concept, largely reflecting on the just-mentioned criticism but also trying to limit analytical complexity (Bair 2005; Bair and Werner 2011; Bolwig et al. 2010; Fold 2014; Leslie and Reimer 1999).
While acknowledging that there are important differences, we understand the GPN approach and the GVC framework to be complementary in fact: starting with the analytical toolset of GVCs does not prevent researchers from incorporating ideas from GPNs. From our viewpoint, GPN and GVC scholars analyse the same phenomena (although the former incorporate almost countless context factors, whereas the latter avoid this). With some caveats, it can also be said that they concentrate on analogous conditions and draw similar conclusions. They are set apart by the fact that GVC scholars seek the simplicity of chain representations, whereas adherents of the GPN framework appreciate the complexity of network models. Hence, the contributors to this book often speak of GPNs and GVCs interchangeably, for instance referring to strategic coupling in GVCs or the input–output dimensions of GPNs.
Instead of summarising all chapters according to the order in which they appear in this volume, we use the remainder of this introduction to elaborate on five key issues in research on GVCs—so as to highlight, rather, how the individual chapters make specific reference to them. First, whether participation in GVCs triggers sustained economic development depends on policies that, for example, enable access to credit, support innovation and help develop infrastructure, as Chap. 4 by Mwanda Phiri and Francis Ziba demonstrates. In this regard initiatives such as the Southern Agricultural Growth Corridor of Tanzania, which is assessed in Chap. 5 by Asmita Parshotam and Javier Revilla Diez, play a vital role. Such initiatives are meant to bring about conditions that enable local actors to participate in regional and global value chains—an upgrade process that is central to several of the contributions to this book. Furthermore, institutional context factors are decisive for foreign investment and local economic development. These include a reliable legal system, secure property rights and the absence of corruption. This is probably best demonstrated by Mauritius, whose institutional efficiency makes the island highly attractive to transnational companies, as Sören Scholvin shows in Chap. 13. If institutions are weak or governments pursue unsound policies, GVCs are unlikely to trigger positive dynamics—as exemplified by the challenges that mark Ghana’s e-waste sector, analysed in Chap. 8 by Richard Grant and Martin Oteng-Ababio.
Second, GVCs are diverse. The features and the various dynamics relating to them vary from one sector to another, as Kaplinsky and Morris (2001, 2016) explain. GVCs in the primary sector appear to be likely to trigger linkages to other branches, especially if there is local processing. The automotive and electronics industries, conversely, are marked by specialisation and globally fragmented production. They require different policies to facilitate economic development, and are characterised by risks and opportunities other than those that mark the primary sector—but ones that have nevertheless been critical for South Africa, for instance (Black 2001, 2007). Reflecting the diversity of GVCs, Chap. 6 by Cornelia Staritz, Leonhard Plank and Mike Morris together with Chap. 12 by Andries du Toit, which deal with the apparel industry and with agriculture respectively, both draw attention to the prospects of local processing—and the related economic dynamics that result from integration into non-local markets of different scales. Chapter 3 by Chelsea Markowitz and Anthony Black as well as Chap. 7 by Eduardo Bidaurratzaga and Artur Colom meanwhile both suggest that it is rather difficult for sub-Saharan Africa to generate such positive effects in the car manufacturing and extractive industries. Stefan Andreasson’s assessment, in Chap. 9, of the prospects of the oil and gas sector furthermore shows that being part of GVCs also means being dependent on global economic processes—ones that usually lie far beyond the control of sub-Saharan African countries. Seemingly, these dynamics are sector-specific.
Third, related to the contribution by Markowitz and Black, an issue of outstanding relevance—particularly for policy-oriented research—is the debate over whether value chains should be regional or global—with emerging economies and developing countries thus fully embracing globalisation in the latter case. RVCs in sub-Saharan Africa are not, to the best of our knowledge, well covered in the scientific literature. While the chapters in Part I are not meant to make a conceptual contribution—one that would, for example, generalise the dynamics distinguishing global from regional value chains—they do provide empirical assessments that reveal the challenges and prospects for establishing RVCs in sub-Saharan Africa. In the case of car manufacturing, costs and benefits are likely to be divided unevenly—with South Africa reinforcing its position as an industrial hub, and other countries having to block imports of second-hand vehicles so as to boost the sale of regionally produced new ones. Dealing with supermarkets in Zambia (largely owned by South African corporations), Phiri and Ziba conclude that local suppliers have much to gain from plugging into RVCs that would open up the markets of Zambia’s neighbouring countries to them. However, Herman Geyer shows in Chap. 2 that mutually beneficial regional trade patterns and RVCs are more vision than reality currently. At present, sub-Saharan Africa’s exports rest mainly on raw materials and low-quality, lower-tiered production inputs to GVCs dominated by companies from the Global North.
Fourth, this book addresses a particular research gap that results from the focus of the mainstream literature on the economic impact that GVCs have at different scales. We think it unwise to neglect the additional political and socio-economic effects of GVCs, however. Too often, research remains limited to assessing the prospects for economic development and providing related policy advice. Such research does generate key insights, but there is more to places being part of GVCs than just economic growth and economic upgrading. Chapter 10 by Ross Harvey, Chap. 11, by Margareet Visser as well as Du Toit’s contribution (Chap. 12) hence go beyond the economics of GVCs. Harvey assesses the potential pitfalls of Tanzania’s resource abundance, concentrating on institutional arrangements meant to help avoid the highly problematic consequences that resource bonanzas tend to have in politically fragile countries. Visser explains, meanwhile, processes of ‘social downgrading’ in fresh-fruit production in South Africa, and resulting violent protests from the GVC perspective—merging it also with the GPN approach. Du Toit compares rural communities in Malawi, South Africa and Zimbabwe. This reveals that what appears to be development from a purely economic perspective—that is, the shift towards large-scale, commercial agriculture—has negative consequences for the concerned communities from a broader socio-economic one.
Fifth, the territorial configuration of GVCs (and of GPNs alike) remains an underdeveloped analytical theme. While the concept distinguishes at a macro-level between places in the Global North that interact through economic processes with ones in the Global South, little is known about the specificities of these sites. The territorial division of GVC segments at the sub-national level—for example into resource extraction at peripheral sites, transport and logistics in medium-sized port cities and GVC governance within national business hubs—is, usually, not addressed. Most importantly, for value chains (both global and regional ones) to function efficiently, transnational companies depend on corporate producer services. These services, for example relating to banking and legal advice, are concentrated in a limited number of cities worldwide. Friedmann and Wolff define these as ‘banking and financial centres, administrative headquarters [and] centres of ideological control’ (1982: 312). They argue that without these cities ‘the world-spanning system of economic relations would be unthinkable’ (1982: 312). Based on Sassen’s (2001) understanding of so-called world cities, which is exclusively about service provision it should be noted, scholars affiliated with the Globalisation and World Cities Research Network have measured the interconnectivity of cities, referring to firms such as Ernst and Young, KPMG and Standard Chartered (Derudder and Taylor 2016; Taylor et al. 2002a, b, c).
Some inroads on world cities as service providers and as hubs in GVCs have been paved already, for instance by the edited volume Commodity Chains and World Cities as well as by a number of journal articles too (Breul and Revilla Diez 2017, 2018; Grant and Nijman 2002; Parnreiter 2015, 2017; Rossi et al. 2007; Scholvin 2017; Sigler 2013). It has been shown that bringing GVCs and world cities together generates important insights: the latter are decisive for the former because of the sophisticated institutional frameworks that they offer (Meyer and Revilla Diez 2014; Meyer et al. 2012). They are, moreover, hubs for logistics and transport, industrial processing, corporate control, service provision and knowledge generation (Scholvin 2017; Scholvin et al. 2017). In line with Phelps (2017), this territoriality of GVCs must now be more closely analysed—because it provides essential explanatory value regarding differentiated developmental outcomes.
The chapters in Part IV of this edited volume elaborate further on these ideas. They advance a typology of ‘gateway cities’, and conclude that whereas Johannesburg and Port Louis can be considered as these all other capitals in sub-Saharan Africa are rather poorly integrated into global flows meanwhile—as scrutinised by Herman Geyer in Chap. 14. As noted, Scholvin’s contribution assesses the location strategies of transnational companies—referring specifically to Mauritius and the oil and gas sector. In Chap. 16, Ivan Turok and Justin Visagie investigate the concentration of knowledge-intensive producer services in Gauteng and elaborate on their composition, evolution and potential to contribute to economic development. They suggest that this particular sector could benefit significantly from accessing the sub-Saharan African market, turning Gauteng into a city region that would serve as a critical node in numerous different GVCs. In Chap. 15, John Stuart also reasons—in his analysis of the information and communications technology (ICT) sector in Cape Town—that there are opportunities for regional trade, especially because the ICT sector has already generated considerable forward linkages both in South Africa and beyond—mainly to the manufacturing of chemicals, machinery, metals and transport equipment, as well as to primary production. He finds, however, that RVCs in ICT—based on Cape Town as a gateway or hub—are but a rather hazy vision at present, however.
Notes
- 1.
One example is ‘Policy Research in International Services and Manufacturing’ (PRISM), a research unit at the University of Cape Town, which conducts research on globalisation, trade and the prospects of industrialisation in sub-Saharan Africa. For further information on PRISM and its publications, see: www.prism.uct.ac.za.
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Scholvin, S., Black, A., Revilla Diez, J., Turok, I. (2019). Introduction. In: Scholvin, S., Black, A., Revilla Diez, J., Turok, I. (eds) Value Chains in Sub-Saharan Africa. Advances in African Economic, Social and Political Development. Springer, Cham. https://doi.org/10.1007/978-3-030-06206-4_1
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