Accessing Global Value Chains: The Politics of Promoting Export-Driven Industrialisation and Upgrading in the Mozambican Cashew Processing Industry

Christina Saulich

2020

Additional info: Access the article here: https://typo3.ruc.dk/fileadmin/assets/isg/02_Forskning/CAE/CAE_working_paper-2020-5.pdf

This working paper focuses on the question: How does politics shape the promotion of export-driven industrialisation and firm-level upgrading in Sub-Saharan Africa? It exemplifies this question with an in-depth, qualitative study of the cashew processing industry in Mozambique in the period from 1991 until 2019. The paper links the political settlements framework, global value chain (GVC) analysis and the research on technological capabilities to explore why the Mozambican Government supported the cashew processing industry and how Mozambican politics shaped the governance of the local cashew value chain and the upgrading paths of local value chain actors. The paper argues that the Mozambican Government supported the cashew processing industry because it became important for the Government’s political survival. In 1999, it adopted a protectionist cashew law that facilitated the re-emergence of the cashew processing industry after its breakdown. The law and the active involvement of the National Cashew Institute (INCAJU) affected the governance of the local cashew value chain, the creation of backward linkages, and the upgrading paths of cashew processors. The paper reveals that the learning channels of firms in global value chains with market-based or modular governance that operate in countries where industrial policies are not enforced effectively may be limited. Firms therefore mainly depend on costly learning channels at firm level, such as learning by doing or hiring skilled labour, and/or on technical assistance from donors to build the technological capabilities needed to access global value chains and to remain competitive. This paper illustrates how to bring politics into the study of upgrading by broadening the analytical focus of GVC analysis to include domestic political settlements and state-business relations, next to the study of firms.