‘Precarious Upgrading’ in Electronics Global Production Networks in Central and Eastern Europe: The Cases of Hungary and Romania

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe electronics manufacturing sector has played a prominent role in export-oriented development strategies, as participation in this high-tech industry promises access to new technology, high skilled jobs and a fast-growing market. Against this background, many governments in Central and Eastern Europe (CEE) have sought to attract investment in this sector, where foreign firms became the key actors in reshaping after 1989 and where integrating into global production networks (GPNs) was widely embraced as a means to modernize and upgrade local industries. We assess to what extent the potential benefits arising from integrating into electronics GPNs have materialized in Hungary, an established player and the most important electronics exporting country in the region, and Romania, a newcomer country in electronics manufacturing. To analyse these questions, we look at the organizational and geographical configuration of the electronics sector and examine the impact integration into these networks has had on local firms and workers and to what extent this integration has led to economic and social upgrading. With regard to economic upgrading processes, we suggest that the upgrading concept needs to pay more attention to the 'reach' of economic upgrading. This is particularly important when integration into GPNs takes place via foreign direct investment (FDI), where economic upgrading processes may be focused on transnational corporations (TNCs) with limited spillovers to local firms. The social upgrading trajectory is influenced importantly by global industry dynamics, for example high flexibility pressures and the tiered nature of the workforce in electronics GPNs, and countries' specific institutional and regulatory contexts.

Global competition, institutional context and regional production networks: up- and downgrading experiences in Romania’s apparel industry

“…As a result, it has neglected the role of non-firm actors, most importantly the state, and the broader multi-scalar institutional, macro and policy contexts within which production networks are embedded (Henderson et al 2002;Bair 2005;Hess/Yeung 2006;Neilson/Pritschard 2009;Neilson et al 2014;Smith et al 2014;Smith 2014;Plank/Staritz 2011). Given the prevailing bias towards the state as the key reference frame and actor, and the simultaneous neglect of firms not only in development studies but more generally in the social sciences (Fischer/Parnreiter 2007), the concentration on firms has certainly made it possible to study more thoroughly corporate strategies and organizational dynamics.…”

“…The intensification of regional trade agreements was a response to heightened competition from Asian countries as the integration of peripheral regional countries was intended to enhance the competitiveness of core countries (Dickerson 1999;Bair/Dussel Peters 2006). EU's trade policy and in particular the OPT agreements and its ROO specifications were central instruments that significantly impacted on the way in which CEE apparel firms were integrated into Western European production networks (Begg et al 2003;Pickles et al 2006;Plank/Staritz 2011).…”

“…The field of exchange rate policy is a prime example with strong appreciation of the Lei impacting significantly on the revenues of Romanian apparel exporters (Sellar 2007). Also labor markets were flexibilised and visa policies were altered resulting in a large outward migration that led to labor shortages which was particularly felt in the apparel sector (Ciutacu 2006;ILO 2010;Plank/Staritz 2011). In addition to rising labor costs firms were also facing rising utility costs as a consequence of EU accession.…”

“…However, upgrading processes can be -and are often -triggered by 'external events' or 'shocks' that 'force' firms to upgrade. Viewed from this point economic upgrading looks more like a survival strategy and re-active adaptation to heightened competitive pressures which questions the conventional rewards associated with upgrading (Pickles et al 2006;Plank/Staritz 2013). Further, shifts in functions do not necessarily result from "suppliers successfully 'wresting'" (Tokatli et al 2008: 277) functions from lead firms; instead, certain functions and responsibilities that lead firms do not consider as part of their core activities anymore are off loaded onto suppliers together with the associated costs and risks (Bair 2005;Tokatli 2013).…”

Влияние Внешних Факторов На Развитие Рынка Консалтинговых Услуг

“…For example, the experiences of Mexico and Central American countries as assembly manufacturers have been likened to the creation of an enclave economy, with few domestic linkages (Gallagher and Zarsky, 2007;Dussel Peters, 2008). The same can be said about the electronics and automotive industries in Eastern and Central Europe (Plank and Staritz, 2013;Pavlinek, 2015;Pavlinek and Zenka, 2016). There has been significant "internal upgrading" within MNE affiliates, but it has involved very few spillovers to the domestic economy in the form of productivity improvements and imitation by domestic firms, partly due to limited linkages of MNEs with local firms and labour markets (Fons-Rosen et al, 2013;Paus, 2014).…”