Global Production Networks and Industrial Upgrading: Negative Lessons from Malaysian Electronics

Many argue that foreign direct investment can promote industrialisation when firms 'learn from global buyers' and move into higher value activities in global production networks (GPNs). We find that global linkages may also trap domestic firms within lower value positions and thus problematise further opportunities for robust economic development. Through a study of Malaysian electronics, we argue that industrial upgrading is historically contingent upon the interactions between shifting GPN architectures and local institutional dynamics. This qualification suggests that, far from being a panacea, GPNs offer only 'windows of opportunity'. If these are not grasped, GPNs can have negative impacts in the sense that they may begin to erode the possibilities for industrial upgrading in developing countries.