This paper investigates how middle-income countries can leverage industrial policies to participate in and upgrade within renewable energy global value chains. We distinguish between deployment and manufacturing chains and examine three sectors, solar photovoltaic, wind, and biomass power, across 12 middle-income countries. Using fuzzy-set qualitative comparative analysis, we identify key combinations of national preconditions and industrial policies—demand-side, supply-side and technology-focused—that enable different participation and upgrading trajectories. While participation is widespread in both chains, upgrading is more prominent in deployment, which presents lower entry barriers. In contrast, upgrading in manufacturing requires stronger sectoral knowledge, larger markets, and robust technology policies. Our results offer actionable insights for policymakers, emphasizing how targeted and context-specific industrial policy mixes are essential to seize windows of opportunity in these green global value chains. The study contributes to the literature on value chains and industrial policy by offering new comparative evidence and practical guidance for latecomer economies seeking to build capabilities and competitiveness in the green economy.

Abstract This chapter examines global value chain (GVC)-oriented policies. It categorizes GVC-oriented policies according to four different policy objectives: participation, value capture, inclusiveness, and resiliency. The social and economic rationales for state intervention across the different types of GVC-oriented policies are compared. In addition, the chapter discusses the instruments and actions at the disposal of governments as they seek to reach their policy objectives. The chapter discusses evidence concerning the nature and functioning of these different GVC policies in the Latin American context. The trifecta of tasks, linkages, and firms explains whether and how GVC-oriented policies differ from traditional public policies. The chapter suggests that carefully-crafted GVC policies, in particular those which engage with the logic and structure of individual sectors, can be effective. This holds out the possibility of energizing growth through the realization of more local value-added, together with domestic accumulation of technological and production-centered capabilities.

We explore the extent to which Chinese lending to African countries promotes participation in Global Value Chains (GVC). Using loan-level data on Chinese and World Bank lending to 37 African countries between 2000 and 2018 we find that in contrast to World Bank lending, Chinese lending is associated positively with an increased GVC participation. This association is driven by infrastructure lending, which is likely to reduce trade costs, making it easier to participate in GVCs. This increased GVC participation is persistent over time and concentrated on the downstream sectors and, thus, is likely to contribute to export and productivity growth.

This paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all foreign direct investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm-level characteristics in investment decisions. The empirical results show that-other things being equal-regions with stronger investment eco-systems are more likely to attract acquisitions, while greenfield investments are more likely in regions with comparatively weaker systemic conditions. Howerver, the regional quality of institutions makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local, and regional policy makers can attract higher quality greenfield investment projects to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI.

Technologies to mitigate climate change may diffuse from lead markets to the rest of the world through several mechanisms and make important contributions to the global green transformation. In this paper, we explore the role played by multinational enterprises (MNEs) in transferring knowledge and innovative capabilities in green technologies to their global subsidiaries. We posit that the degree of green knowledge transfer and innovative capability development in subsidiaries depend on: (i) the host country characteristics, (ii) the specific technology in question, and (iii) the mode of entry. The empirical analysis combines data on foreign direct investments with patent analysis. The results suggest that being a subsidiary of a green MNE has a positive impact on the number and quality of green patents produced locally. This green innovative advantage vis-a-vis domestic companies is larger in less developed countries and in those that are less reliant on oil rents, in particular if they already possess higher levels of relevant domestic innovative capacity. Furthermore, firm and sectoral characteristics also matter. The analysis suggests that green FDIs are more effective when technologies are characterized by low tradability and tacit knowledge. Finally, cross-border acquisitions are more efficient at strengthening green innovative capabilities than subsidiaries established with greenfield investments. & COPY; 2023 Published by Elsevier Ltd.

In the Caribbean region, clusters hold tremendous potential because of the predominance of small and micro enterprises, their weak link in value chains and the scarcity of specialized inputs. The Compete Caribbean Partnership Facility (CCPF) has backed a capacity-building campaign for the cluster approach with the aim of mainstreaming cluster interventions in the region. This report explores how the process of mainstreaming is taking shape among those business support organizations (BSOs) involved in the CCPF project, currently involved in the implementation of cluster projects. The study addressed these questions: (i) Have the BSOs improved their capacity to identify, design, and implement sustainable cluster initiatives? (ii) Is the cluster approach becoming mainstream in the Caribbean region? Based on primary evidence, the main findings are as follows. BSOs have played a key role by engendering a collaborative culture amongst clusters. One of the main achievements in implementing cluster programs is the increasing cooperation between clusters. Among the BSOs, there is general agreement over the usefulness of monitoring the cluster implementation when taking informed decisions, but the collection of information is also challenging. In the Caribbean region, cluster policies do not yet represent the core of industrial development policies; nonetheless, the potential for a more regional approach to cluster mainstreaming has surfaced in interviews. Policy recommendations for introducing and promoting the mainstreaming of a cluster approach in the Caribbean region should take a three-pronged approach that focuses on (i) cluster organizations, (ii) national ecosystems, and (iii) regional ecosystems.

We investigate the impact of Outward Foreign Direct Investment (OFDI) on the innovation performance of Indian multinationals by analysing their choice of entry mode (cross-border acquisitions versus greenfield investments) and their international location decisions (i.e. choice to locate in a global city). We rely on an augmented fractional logit estimator for 170 foreign investments in high- and medium-high tech manufacturing sectors in the period 2003 to 2011 and find that: (i) compared to greenfield investments, acquisitions generate more technological opportunities; (ii) location in a global city has a negative impact on the Indian companies' innovation performance; (iii) the positive effect of acquisition decreases if the investment is focused on a global city. These findings should be informative for both firms and government authorities involved in developing going-global strategies.

R&D related foreign direct investments represent a powerful mechanism for cross-border knowledge sharing that can stimulate the process of technological catch-up. However, low-income countries and smaller middle-income countries remain largely excluded from this kind of global flows of knowledge. In this chapter, we discuss the motivations and implications of this type of FDI for low and middle income countries, building on a critical review of the existing literature and analyse the trajectory of R&D FDI during the period 2003-2017 by region and industry. The data is used as a point of departure to discuss potential policies specially tailored for low and middle income countries and their capacity to attract and anchor R&D related FDI for technological catch up. The paper finalizes outlining a future research agenda.

Pursuing the “Go Global” strategy launched in 1999, China has recently become one of the major outbound investors worldwide. In the first stage, Chinese outward foreign direct investments (OFDIs) were directed to developing countries, mainly driven by resource-seeking motives; afterward, they started targeting advanced economies, searching for new markets and new technologies. This chapter provides some descriptive evidence of dynamic trends and spatial/sectoral distribution of the Chinese OFDIs that are more likely to affect investors’ innovation capabilities: greenfield investments in research and development activities and cross-border acquisitions of medium-high-tech companies located in technologically advanced countries. Moreover, it discusses the impact of such OFDIs by providing a critical review of the existing literature about the moderating factors that enhance the chances of positive outcomes and the learning mechanisms though which investors source new knowledge from foreign subsidiaries. It concludes with suggestions for future research.

There is mounting agreement that the global economy is at the nascent stage of a green transformation. In response, multinational enterprises (MNEs) are seeking to enhance their capabilities for sustainable innovation and many have started to globalise their green efforts. But to what extent and how (if at all) do green Foreign Direct Investments (FDIs) contribute to the deepening of sustainability capabilities? To address this question, we employ a novel dataset of 1217 green FDI in renewable energy sectors worldwide, during the period 1997 to 2015. A propensity score matching and difference-in-difference econometric strategy provides three main results. First, green FDIs enhance the overall orientation to sustainability of MNEs. They have both a greening effect on the firms' overall technology bases and increases specialization in specific green technologies. Second, green FDIs have a significant positive impact on the degree and quality of MNEs innovative capacity in sustainable technologies. In other words, the MNEs extend their innovative capabilities towards more sustainability-oriented direction and strengthen their innovation activities related to green technologies. Third, we find that the globalisation process mode matters: in the long run, green FDIs result in newly-established subsidiaries contributing more to innovativeness and greening than acquisition of foreign firms. These findings have important implications for policies designed to increase the sustainability transition.

In this article, we take stock of the nature and scope of global value chain (GVC)-oriented policies. Building on the papers that have been accepted to the special collection, we categorize GVC-oriented policies according to four different policy objectives: participation, value capture, inclusiveness, and resiliency. We compare and contrast the social and economic rationales for state intervention across the different types of GVC-oriented policies and discuss the instruments and actions at the disposal of governments to reach their policy objectives. The trifecta of tasks, linkages, and firms explains whether and how GVC-oriented policies differ from traditional public policies.

Innovation trajectories in global value chains (GVCs) can take differentiated pathways. In this article, we address the question: do stylized trajectories emerge from the analysis of countries’ relative innovative capacity (IC) and GVC participation? We draw explorative insights from a cluster analysis of 45 countries on the two subsectors of the information technology industry: hardware and software. Our analysis uncovers remarkable differences between hardware and software and across countries. We identify different trajectories and discuss the sectoral specificities that contribute explaining their existence. The association between the strengthening of IC and a deeper insertion in GVCs applies only to a handful of countries and only in the software subsector. The specificity of this association raises questions for future research on innovation trajectories in GVCs.

In Chapter 6, Amendolagine et al. (2020) explores cross-border acquisitions of Chinese small and medium enterprises in high tech industries, done within EU, USA and Japan. The chapter highlights the roles of these firms as connecting nodes between the home and host regions, where regions are characterized by different degrees of technological distance. The chapter uses a Technology Proximity Index, in order to analyze how homogeneous the patents are in terms of technological classes in the home and host regions. The descriptive analysis is based on a sample of 95 acquisitions occurring between 2003 and 2011 and on the investors’ patent portfolio characteristics, such as technology specialization, experience, size and number of collaborative patents. The chapter reveals that investors with stronger knowledge bases and with more diversified and larger patent portfolios are more likely to invest in more technologically distant regions. In addition, although they are more involved in collaborative patents at home and abroad, these investors are not more likely than other Chinese multinational firms to establish international collaborations for patents.

The world is in the early stages of a paradigm transition toward a global green economy. In this article, we propose the notion of green windows of opportunity, highlighting the importance of institutional changes in the creation of new opportunities for latecomer development. We emphasize how demand and mission-guided technical change influence the directionality of latecomer development and highlight the important role emerging economies may attain in the global green transformation. We provide important insights regarding opportunities for green development in emerging economies, how these opportunities emerge in different renewable energy sectors and their implications for the global green economy.

This chapter aims to study the laws of motion of the milieu, its ability to react to radical changes, its trajectories of evolution, drawing some theoretical hypotheses of dynamic behaviour from empirical research carried out in three Italian areas specialised in footwear. These are Montebelluna, Riviera del Brenta and Marches. The chapter explains the theoretical framework for analysing the dynamics of milieu and presents some background information on the evolution of the Italian footwear industry. It analyses the reactions of the three areas studied to the radical changes identified. The chapter examines the different answers given by the two main contrary typologies of sub-systems: the progressive and the regressive coalition, but also by a third marginal typology of innovative behaviour, the niche hunters. The free-riders' resistance to change may evolve into a regressive coalition which may hamper the innovative process in the production system through several mechanisms.

Developing countries are faced with significant challenges related to building and deepening their innovation capabilities. In this chapter, we focus on innovation in global value chains and on the role that such chains play in building and deepening capability. We also focus on the trajectories along which firms, once inserted into global value chains and located in developing countries, acquire or lose innovation capability. To do so, we bring together the global value chains and innovation systems approaches. Our key arguments are that global value chains interact with innovation systems in multiple ways and that these interactions have important implications for the speed, depth, and overall quality of capability building in developing-country firms. We outline five innovation capability trajectories and show how capability building at the firm level interrelates with the various ways in which global value chains and innovation systems co-evolve.