ABSTRACT
What factors and forces shape opportunities for local economic development under conditions of globalization of production and trade? Discussions on this question in the past few years have focused on the role of global value chains as a principal avenue for local economic development. Value chains are said to shape opportunities for insertion into markets and for upgrading of local enterprises. Upgrading can take different forms: process, product, functional and intersectoral. Functional upgrading has been considered the best avenue for local economic development, as it results in greater value appropriation by local enterprises. However, the degree and nature of upgrading of local enterprises is greatly influenced by their relationships with other firms in the chain. These relationships have been categorized in various ways (e.g. Schmitz 2004). Consequently, research along these lines has concentrated on governance of the chains to define these relationships and the room available for upgrading.
