Engagement to global production networks in southeast Asia: prospects for technology upgrade and lessons for Latin America

Abstract

Developing countries are under constant pressure to improve economic conditions and generate sources of employment. To achieve these goals, in the last few decades the mantra has been to engage in global production networks and carry out institutional reforms to attract foreign capital. However, the current set of ideas about globalization is dominated by the premise that economic institutions should aim to insert national economies (or sub-regions) into certain stages of production and specialization (Baldwin, 2012, 2013; Gereffi & Sturgeon, 2013; World Trade Organization, 2011). Developing countries are often targeted at the extractive and labor intensive stages, thus influencing the reforms to become as functional nodes of the global capitalist network. This article argues that any institutional reformulation must contemplate a two-track strategy instead of a single one. This is, the economy must be re- structured to attract foreign direct investment, but it must also seek to develop domestic capacities independently not only engage local capital, preferably in high value-added stages, but also to socially master as many phases of the production process as possible. Thus, it is suggested to reconsider an updated developmental industrial policy as the guiding thread of economic policy.