Multichain strategies and economic upgrading in global value chains: Evidence from Kenyan horticulture

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Abstract

An extensive body of research has examined the prospects for suppliers in the global South to upgrade within global value chains (GVCs) controlled by lead firms from, and oriented towards end-markets in, the global North. However, the expansion of South-South trade has altered the geography of GVCs. Previous studies highlight key differences between North-South value chains (NVCs) and South-South value chains (SVCs). Much less is known about the multichain strategies used by suppliers who participate simultaneously in NVCs and SVCs, and how these affect their prospects for economic upgrading. This article draws on the case of Kenyan horticultural suppliers to explore the implications of multichain strategies for economic upgrading, in terms of value-added tasks (product diversification and product sophistication) and economic returns (unit values). We adopt a mixed-methods approach combining transaction-level customs data for the 2006-2018 period with supplier interviews. We find that suppliers adopting multichain strategies experienced significantly more product diversification and higher economic returns than suppliers operating only in NVCs or SVCs, yet results for product sophistication are insignificant. Our results are robust to the use of multilevel linear regressions (MLRs), propensity score matching (PSM), and two-step system-GMM. The article highlights a critical need for GVC research to account for the multichain strategies of suppliers serving multiple and overlapping value chains, and their implications for economic upgrading.

Bibliographical metadata

Original languageEnglish
JournalWorld Development
Early online date1 Jun 2021
DOIs
Publication statusPublished - 1 Jun 2021

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