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Paper short abstract:

Focusing on green industrialisation, this research explores how industrial policy can leverage intersectoral dependencies to localise knowledge and while linking into GVCs. It bridges gaps in theories that overlook how African industrial hubs often rely on both domestic and foreign ownership.

Paper long abstract:

This research rests on three strands of the literature. First, it speaks to a strand of the literature that conceptualises economic development as a process driven by ‘the principle of relatedness’ whereby countries tend to diversify towards economic activities that do not require too distant capabilities (Hidalgo et al., 2018). Second, it acknowledges another strand of the literature that contends that structural change is in fact about ‘jumping’ into distant activities that can foster dynamic competitive advantage (Lin & Chang, 2009). Third, it addresses these diversification dynamics from the perspective of locally anchoring investments while participating in Global Value Chains (GVC) (Gong et al., 2024).

Debates on anchoring investment while contributing to GVC have often focused on the limited spillovers of FDI (UNCTAD, 2021). At the same time, standard theories studying the dynamics of industrial hubs often draw from Global North cases (e.g. Piore & Sabel, 1984; Saxenian, 1994), which tend to assume there exists a certain degree of domestic ownership and strategic autonomy. This is not applicable to the reality of many African industrial hubs, which rely on a combination of domestic and foreign ownership driven by their subordinate position in the global economy (Oqubay & Lin, 2020). What some of these theories suggest, however, is the potential of intersectoral dependencies in steering diversification dynamics (Andreoni, 2018). In this context, this research investigates how industrial policy can be used to benefit from GVC while localising knowledge by leveraging intersectoral dependencies, with specific reference to green industrialisation.