SME participation in GVCs and inclusive development: a conceptual framework
David Adeyeye (Stellenbosch University)
Abiodun Egbetokun (National Centre for Technology Management, Nigeria)
Sara Grobbelaar (Stellenbosch University)
Paper short abstract:
The challenge of poverty and unemployment facing many developing countries is traceable to weak beneficiation capabilities of SMEs participating in GVCs. This paper proposes a conceptual framework that mainstreams development concerns in the process and outcome of SMEs capability building in GVCs.
Paper long abstract:
Many developing economies, particularly in Africa, rely on export of primary products (particularly agricultural products and natural resources). Most of the domestic firms, usually SMEs, lack the capability to implement value-addition processes; hence, they enjoy limited benefits from participation in global value chains (GVCs). It is therefore not surprising that African countries have low levels of industrial development. However, focusing on capability building without mainstreaming development concerns in production and processing activities will not engender inclusive development. Hence, the primary objective of this paper is to develop a conceptual framework for integrating development concerns in GVCs, especially as it relates to the participation of developing country SMEs. This is important because SMEs dominate the economic landscape of developing countries and provide livelihood opportunities for millions of people. While most studies on GVCs focus on enhancing the capabilities of SMEs through upgrading and scaling, this paper examines the inclusiveness of the process and outcome of capability building of SMEs participating in GVCs. The framework identifies the factors responsible for the weak domestic capabilities. In addressing these and consequently integrating SMEs into GVCs, efforts should be inclusive. For instance, institutions and policies enacted to enable upgrading and scaling should be gender-sensitive. Also, the spill-over effects of upgrading on livelihood of local communities should be considered. This is because the impact of upgrading on resource base and environment in local communities is important. More often than not, the economic and health consequences of environmental changes are gender-, wealth- and status-dependent.
Integrating SMEs in global value chains and the challenge of inclusive development