Call For Papers >> Industrial Policy and Global Value Chains in an Era of Disruptions

Publication

Journal of International Business Policy

Title

Industrial Policy and Global Value Chains in an Era of Disruptions

Type

Journal Special Issue

Editors

Gary Gereffi, Pavida Pananond, Fredrik Tell, Tony Fang

Deadline

December 15, 2023

Description

Guest editors

  1. Gary Gereffi (Duke University)
  2. Pavida Pananond (Thammasat University)
  3. Fredrik Tell (Uppsala University)
  4. Tony Fang (Stockholm University)

Background

The societal relevance and impact of international business (IB) research to bridge the gap between theory and practice and to contribute to the betterment of the world are increasingly emphasized within the IB discipline (Tung, 2023). From its inception, the Journal of International Business Policy (JIBP) has sought to encourage scholars in IB and cognate fields to increase their impact in policymaking circles by connecting IB research to major contemporary issues (Lundan, 2018; Van Assche, 2018). The global value chain (GVC) research community is uniquely positioned to pursue and deliver this impact because it links “the macro- (global), meso- (industry and country) and micro- (firm and community) levels of analysis” (Gereffi, 2019: 196) and “bridges the firm-specific, private-sector and country-level, societal divide that has separated the international business and international economics literatures” (ibid: 195). The GVC approach has successfully navigated this terrain through its focus on the role of multinational enterprises (MNEs) in global industries, examining how international trade and foreign direct investment (FDI) affect the development prospects of advanced, emerging and less-developed nations in the global economy (Gereffi, 2018; 2019).

Industrial policy and GVCs

One of the most hotly contested issues in GVC research concerns the varied roles of the state in the development process (Horner & Alford, 2019). How states used different policies to direct economic activities has also been discussed in the literature on industrial policy (see, e.g., Rodrik, 2008; Harrison & Rodríguez-Clare, 2010; Warwick, 2013). Although the concept can be traced back to the infant industry arguments of United States (US) Treasury Secretary Alexander Hamilton in the 18th century and German economist Friedrich List in the 19th century, industrial policy became widely debated and deployed in both developing and industrialised economies in the post-World War II period (Naudé, 2010; Andreoni & Chang, 2019).

Definitions of industrial policy range from broad to narrow. Drawing upon his literature review, Warwick (2013: 16) suggests: “Industrial policy is any type of intervention or government policy that attempts to improve the business environment or to alter the structure of economic activity toward sectors, technologies or tasks that are expected to offer better prospects for economic growth or societal welfare than would occur in the absence of such intervention.” Industrial policies can be of both “harder” (price-related) and “softer” (collaboration-oriented) varieties (Harrison & Rodríguez-Clare, 2010), and they may be targeted horizontally across the economy or towards designated sectors (Warwick, 2013).

In the 1960s and 1970s, the state played a large and direct role in the import-substituting industrialization (ISI) strategies in Latin America, India, and elsewhere, where the tools of industrial policy included local-content requirements, mandatory joint-ventures, and export-promotion schemes to induce MNEs to set up local subsidiaries to make goods in relatively protected domestic markets (Gereffi, 1994: 215-217). In Asia as well, the “Five Dragons”, i.e. Japan (Johnson, 1982), South Korea (Amsden, 1989), Taiwan (Wade, 1990), Hong Kong (Chiu, Ho & Lui, 1997) and Singapore (Cheang, 2022), prospered by adopting their own versions of industrial policy with an active state role in promoting export-oriented industrialization (EOI). A combination of ISI and EOI development strategies has typically been adopted in newly industrializing economies across Latin America and Asia (Gereffi and Wyman, 1990).

Although the neoliberal narrative of the 1970s frowned upon an extensive role of the state in economic management and discredited the use of industrial policy, the concept resurfaced since the mid-2000s as a response to the global financial crisis (Wade, 2018; Chang & Andreoni, 2020; Rodrik, 2023). Today, industrial policy is back in mainstream debates largely due to the growing geopolitical concern of major economic superpowers (Cherif & Hasanov, 2019). The surge of China to become the leading export economy and second largest economy in the world (behind only the US) highlights the importance of balancing the attention given to advanced industrial economies along with emerging and less developed economies in the Global South (Tung, 2023). In addition, smaller economies in Southeast Asia, like Indonesia, Malaysia, and Thailand have their own types of developmental state and economic development patterns (Rasiah, 2021), highlighting the ongoing need for comparative research on this topic.

Current disruptions and the return of industrial policy

The current era is defined by multiple disruptions and economic slowdowns caused by the COVID-19 global pandemic (Gereffi, 2020), the manifold logistical, energy, refugee, and supply consequences of the Ukraine war (Pisani-Ferry, 2022), the rising wave of economic nationalism, and the antagonistic rivalry between the United States and China (Tung, Zander, & Fang, 2023), the world’s two largest economies. In response, governments around the world have chosen to prioritize or reorient industrial policies to strengthen strategic global supply chains of their respective nations. In this era of disruption, we appear to be shifting, at least in part, from a prosperity-driven to a security-driven development landscape, and in this special issue we seek a deeper understanding of how GVCs are changing in the process (Gereffi, 2014; Pananond, Gereffi & Pedersen, 2020; Lee & Gereffi, 2021; Zhan, 2021).

GVC research has shown that “resilience” has different meanings at the firm level (operational efficiency), for supply chains (governance structures and strategies of lead firms) and for countries (national security) (Gereffi, Pananond & Pedersen, 2022). However, the security-driven narrative on economic resilience may emphasize a country-level focus over other perspectives. The one-sided interpretation of resilience in response to home-country geopolitical concerns may result in practices, like reshoring or divestment, that may not always bode well for firms’ governance and financial performance (Pedroletti & Ciabuschi, 2023; Pietrobelli & Seri, 2023).

The renewal of industrial policy adoption in the name of national economic security may trigger further changes and reconfigurations in global industries. In the US, the Biden administration has sought to build more resilient supply chains by strengthening U.S. manufacturing capabilities in strategic sectors such as semiconductors, batteries for electric vehicles, active ingredients for essential medicines, and critical minerals used in advanced electronics and clean energy (White House, 2021). The 2020 Industrial Strategy for Europe (European Commission, 2020) is designed to support the twin transition to a green and digital economy, making European Union (EU) industry more competitive globally. Measures aim at enhancing Europe’s autonomy by fortifying a series of “strategic value chains” including clean and autonomous vehicles, smart health, low-carbon emission industries, the industrial internet of things, and cybersecurity (European Commission, 2019; Dür, Eckhardt & Poletti, 2022). More broadly, the US-led Global North is seeking to build up a “democratic chips” alliance (Reuters, 2022) to reduce their reliance on China (Luo & Van Assche, 2023; Peters, 2022).

Concurrently, in China, President Xi Jinping’s call to realize the “Chinese Dream” (i.e., the great rejuvenation of the Chinese nation) has fuelled China’s own quest to become a technological superpower with advanced manufacturing, electric vehicles, clean energy, and digital technologies being built up rapidly. The launch of China’s long-term state-sponsored initiatives such as “Made in China 2025”, the Belt and Road Initiative (BRI), and China’s Dual Circulation model (European Union, 2020) are strategic moves to make China a leader in global high-tech manufacturing and simultaneously focus on domestic demand and indigenous innovation. The US-China rivalry is increasing and the challenges for trade and industrial policies in GVCs are significant (Li et al., 2022). Notwithstanding a dominant central government and a panoply of state-owned enterprises that wield enormous influence over the national economy, China’s diversified and sustained export success in GVCs and its rapid economic growth also reflect more decentralized and bottom-up policy initiatives at the city and provincial levels (Gereffi, Bamber, & Fernandez-Stark, 2022).

To combat the resource nationalism related to China’s control of many rare-earth minerals (e.g., 41% of cobalt, 28% of lithium, 78% of graphite, and 6% of nickel) and 80% of the processing capacity for these minerals (Chang & Bradsher, 2023), the US State Department is pushing a “minerals security partnership” with 13 governments (U.S. Dept. of State, 2022). In addition, the EU has proposed a “buyers’ club” for critical minerals with G7 countries (Swanson, 2023). The main goals of both proposals are to establish common (and higher) labor standards for suppliers of critical minerals, given the poor standards typical in many mineral-rich countries, as well as to reduce the dependency on China.

Implications of changing configurations of GVCs for IB and industrial policy

Decoupling from China or severing the complex supply chains that tie the two countries together has been popular in some US policy circles, but would have major consequences for the reconfiguration of GVCs throughout the world (Vertinsky et al., 2023; Witt et al., 2023). Given the well-established difficulties of decoupling from China (Farrell & Newman, 2020; Shih, 2020), international leaders have begun advocating for an alternative notion of “de-risking” to deal with a more assertive China (Ciuriak, 2023). European Commission President Ursula von der Leyen initially introduced the term in a speech on March 30, 2023: “I believe it is neither viable – nor in Europe’s interest – to decouple from China. Our relations are not black or white – and our response cannot be either. This is why we need to focus on de-risk – and not decouple” (Cave, 2023).

National and regional initiatives all utilize various forms of industrial policy to remake GVCs (Gereffi & Sturgeon, 2013; Pietrobelli, Rabellotti & Van Assche, 2021). However, 21st century development strategies require interactive industrial policy to navigate complex trade and production linkages in the global economy (Gereffi, Lim & Lee, 2021), unlike earlier eras when domestic industries were more self-contained (Rodrik, 2023). A modern industrial and innovation strategy must simultaneously address several related sets of concerns: global economic competitiveness, national security, reliable international partnerships, and inclusive and sustainable economic growth (Sullivan, 2023; Bistline, Mehrote & Wolfram, 2023; Patrucco et al., 2022). While global challenges like climate change, sustainable development, and demographic shifts require coordinated action, regions may offer the best setting to identify supply-chain trade-offs and conflicts, and negotiate stable global solutions (O’Neill, 2022).   Thus, a GVC perspective on industrial policy allows us a broader space to examine its wide-ranging impacts on social and environmental upgrading progress and the overarching economic goals of growth and sustainability.

Possible Topical Areas of Interest

For this special issue, we invite scholars to contribute theoretical and empirical research that expands or improves current knowledge on the interaction between industrial policy and GVCs in an era of disruptions. Submissions may include but are not restricted to the following topics:

GVCs as a driver of industrial policy

  • How do public agendas around industrial policy emerge and evolve in light of recent patterns of GVC competition?
  • Do geographical chokepoints in GVCs help drive the rise of industrial policy in strategic sectors? Are industrial policies effective in addressing such chokepoints?
  • How can cross-sectoral, cross-regional and/or cross-cultural compositions of GVCs be used to study policy ambitions with respect to strategic industries?
  • What are causes, effects and processes associated with the relocation of supply and industrial policies in emerging economies?
  • What does the move from “prosperity-driven” to “security-driven” in different national or regional contexts mean for GVCs?

Industrial policy and GVC governance

  • How do specific industrial policy initiatives affect GVC configurations? Does it differ if they are developed for resilience or sustainability reasons?
  • How does industrial policy shape patterns of offshoring/reshoring/friendshoring? What are main antecedents and consequences?
  • How do sanctions (geopolitical, technological, financial, and trade-related) affect GVC strategy and operations? Can MNEs shirk the effects by reconfiguring their GVCs?
  • Is “smart specialization” attainable and desirable in today’s era of disruptions?
  • What lessons can be drawn from the Covid-19 pandemic for more sustainable and inclusive GVC governance?
  • Can industrial policies such as the Carbon Border Adjustment Mechanism reduce carbon leakage through global value chains?

Industrial policy and deglobalization

  • Is the deglobalization of GVCs a likely outcome of regional and national sources of policy change? May this differ across regions?
  • How do MNE strategies interact with global and local policy landscapes with respect to evolving GVC governance?
  • How does populism affect IB policies in GVCs?
  • Do regional trade agreements strengthen or undermine GVC trade and investment linkages? 

GVC reactions to industrial policy

  • What supplier strategies are effective in coping with the consequences of policy-driven GVC disruptions and how have these evolved?
  • How do friend-shoring and ally-shoring initiatives affect MNE strategies and changing industrial policies?
  • What is the proper balance between just-in-time (JIT) and just-in-case (JIC) business models to stabilize GVCs in the realm of new industrial policies?

Industrial policy and implications on innovation and economic development

  • What are the ramifications of policy-induced technology wars for the location and rate of innovation activities?
  • How do changes in the industrial policy landscape affect economic development in emerging or least-developed economies?
  • What are examples, processes and effects of unintended consequences of policy changes?
  • What is the impact of supply-chain disruptions on the importance of a multilateral trading system based on WTO rules?
  • How are different views of political and business leaders in the Global South vs. the Global North on changing GVC configurations expressed and why?

Envisioned impact

The discussion on industrial policy in this special issue should provide useful and holistic insights for economic policy makers on the consequences of industrial policy beyond domestic borders. These insights could help policy makers in the areas of trade and investment promotion, as well as those involved in foreign relations.  At the same time, such discussion should also benefit managers of firms whose activities are part of global value chains across industries, both in advanced and developing economies.

 

Submission and Review Process

Submitted manuscripts must adhere to the scope, standards, format, and editorial policy of the Journal of International Business Policy (JIBP). “Author Guidelines” and the JIBP Style Guide for Authors must be followed.

The Special Issue will proceed in two phases. In Phase 1, the four guest editors will review all submitted proposals. A Proposal should not exceed 2500 words, including graphs, tables, figures, and references. It should provide (i) the author(s)’ details; (ii) purpose of the study; (iii) the research question(s) being addressed; (iv) how the piece addresses the core concepts of the special issue; and (v) the relevance of the study for scholars and policy professionals; and (vi) the envisioned impact of the paper.

Contributors with submissions likely to contribute to the SI will be invited to attend an online idea development workshop prior to submitting their full papers. These invitations provide no guarantee for publication in the SI. They serve as indications of our interest in how the full papers can contribute to the SI. In Phase 2, the submitted papers will go through the regular JIBP process of submission, peer-review, revision, acceptance, and JIBP publication. The timeline for submission is as follows:

 

December 15, 2023       Deadline for proposal submission via JIBP’s Manuscript Central portal 

February 2024               Idea Development Workshop (virtual)

June 15, 2024                Deadline for submission of full papers via JIBP’s Manuscript Central portal

Autumn 2024                Paper Development Workshop (virtual)

June 15, 2025                Expected publication of SI (accepted articles published online)

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