Savona EJDR proofs 41287_2021_366_OnlinePDF.pdf (882.2 kB)
Revisiting high development theory to explain upgrading prospects in business services global value chains
The article revisits two classical approaches to development and trade, and offers an alternative account of the emergence of global value chains (GVCs) involving business services (BS), to trade-in-tasks theory. Based on this account, we propose what we call the Hirschman–Linder hypothesis (HLH), which predicts the need for an adequate ‘representative domestic’ (intermediate) demand for BS for countries to enter and upgrade in BS GVCs. We review the quantitative and qualitative empirical evidence supporting the HLH and find two main results: (i) countries with a substantial manufacturing core are more likely to participate (and eventually to upgrade) in BS GVCs, and (ii) countries endowed or specialized in natural resource industry (NRI), either the primary or extractive sectors are also likely to be part of BS GVCs. If BS GVCs represent globalization’s third unbundling for developing countries, the HLH suggests that on the one hand a core manufacturing sector is essential for entering and upgrading in BS GVCs, and on the other hand that if countries can diversify into BS and upgrade in BS GVCs specialization in natural resources might not necessarily be a curse.
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Publication status
- Published
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- Accepted version
Journal
European Journal of Development ResearchISSN
0957-8811Publisher
Palgrave MacmillanExternal DOI
Department affiliated with
- SPRU - Science Policy Research Unit Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2021-01-11First Open Access (FOA) Date
2022-03-09First Compliant Deposit (FCD) Date
2021-03-12Usage metrics
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