From SUPPLIERS to NODES in Global Value Chains: An upgradation of the ICT cluster of Pakistan through regionaland national innovation systems

The bottom-level weaker position of developing countries industrial clusters in GVCs make them prone to thethreats of non-compliance of international standards and power dominance by lead firm in GVCs as empiricallyevident from the traditional industrial clusters of Pakistan. In the context of sceptical literature on the upgradingof supplier firms in GVCs, this research argues that the GVC analysis is limited because the GVC approach takesa quite identifiable linear perspective because the main actors taken into account are firms along the value chainand the lack of attention to the institutional context within which local firms interacting in GVC are embedded.The main research question is how do the innovation systems at the regional and national level support industrialclustered firms in their ability to upgrade from a position of SUPPLIERS to NODES in GVC through the linkswith knowledge institutes embedded in ISs and GVCs. This research test the hypotheses using empirical study ofthe ICT clusters of Pakistan significantly agglomerated in the cities of Islamabad, Lahore and Karachi. Theeconometric analysis of cluster firms’ data shows that knowledge links with the knowledge institutes do notsupport the upgrading of firms in GVC.

Keywords:

industrial cluster , developing countries , GVC , NIS , RIS , upgrading