Not where, But how to participate in the global economy

Raphael Kaplinsky

"Sustainable Growth in a Globalising World -- Not Whether, But How to Participate in the Global Economy"

This Jubilee Lecture for the 25th birthday of its European Journal of Development Research (EJDR) was part of the 14th EADI General Conference "Responsible Development in a Polycentric World: Inequality, Citizenship and the Middle Classes" (Monday, 23 June 2014, 5pm).

By providing the scope for increasing scale, specialisation and learning, participation in the global economy offers low and middle income economies the opportunity of achieving sustainable income growth. But at the same time, participation in competitive global markets threatens a race to the bottom and an outcome of immiserising growth. The challenge, therefore, is not so much whether to, but how to participate gainfully in the global economy.

Achieving a positive outcome requires economies to take advantage of their natural resource rents and to recognise, appropriate and (in time) to generate innovation rents. It is widely (re-)accepted that markets alone will not deliver optimal outcomes, and that policy support is a necessary requirement for maximising the opportunities opened up by globalisation.

Appropriate and effective policy responses need to be attuned to the structure and functioning of global value chains (GVCs). Two families of GVCs can be identified -- vertical specialisation GVCs (for example, in electronics and apparel assembly) and additive GVCs (for example, in the commodities sectors). They are of differential significance in low-middle income and high income economies, and call for different packages of policy support. Although context varies, it is likely that effective policy responses for GVC insertion will require running on two policy tracks simultaneously. Moreover, achieving a developmental outcome will require that these policies will necessarily need to focus on the nature and dynamics of inclusion in both families of GVCs.



Isa Baud, President of EADI

Spencer Henson, Editor in Chief of the European Journal of Development Research



Raphael Kaplinsky, Professor of International Development, The Open University, UK