Upgrading Under Volatility in a Global Economy

摘要: Upgrading has been a main policy focus of the development literature for past two decades. The predominant model firms with low capabilities moving up value chain through learning in global production networks and support robust local institutions. Time after time when upgrading efforts fail, recommended solution is to pour more resources: new investments, subsidies training. Yet little changed. Using critical case study Penang semiconductor cluster, this paper proposes an alternative set hypotheses about emerging economies. The real challenge volatility. problem not that there are only capabilities, but rather plenty high capabilities. These firms, by leveraging policy, have developed sophisticated meet increasingly volatile demand industries, electronics. Contrary conventional wisdom, they do compete away profits or solely rely on cheap labor. these -- prime candidates upgrade become sufficiently successful specialty under present regime, no incentive otherwise. They created sustainable niche, one upward pathway. Firms take different route, avoiding markets altogether. shows volatility determines international division labor economies, search wages.