ABSTRACT
The lead firm is a powerful economic actor in a global value chain (GVC). This chapter discusses the importance of multinational enterprises in this context, and how policy decision-makers can leverage foreign direct investment decisions. Advocates of GVCs see the potential for regions to move up the value chain, they reinvigorate themselves onto higher growth trajectories. In the context of regional upgrading, it is important to consider where this value generation process occurs. A GVC takes the typical value chain concept and places it in the context of global economic integration. A firm or a region’s position in the value chain is of key interest to policy decision-makers. The pursuit of upgrading allows firms and regions to move into tasks that create more value-added. Non-equity involves more contractual partners and external suppliers at arm’s length. It is lead firms that make these strategic decisions; the scope for entering GVCs is not in the hands of countries or subnational regions.
