The Global Automotive Industry Value Chain: What Prospects for Upgrading by Developing Countries

UNIDO Sectorial Studies Series Working Paper

62 Pages Posted: 2 Sep 2003

See all articles by John Humphrey

John Humphrey

University of Sussex - Institute of Development Studies

Olga Memedovic

United Nations Industrial Development Organisation - Strategic Research and Economics

Abstract

The paper opens by mapping the changes in the global auto industry in the 1990s, showing how the rapid growth in sales and production between 1990 and 1997 came largely from the emerging markets rather than the Triad regions (North America, the European Union and Japan). However, for some of these markets the downturn that followed was substantial and prolonged.

The emergence of regional production systems resulted in regional integration. This created opportunities for industrial upgrading in developing countries with links to one of the Triad regions, where a major part of production still takes place.

The paper then describes how the relationship between assemblers and suppliers has changed. There is a growing preference for using the same suppliers in different locations (follow sourcing), which limits the possibilities for component supplying by local producers in developing countries. However, opportunities in second-tier sourcing, where a global reach is not required, do exist. The paper shows that developing countries can increase the possibility of integration into the global value chains of transnational automotive companies by opening up their domestic markets.

It concludes with emphasizing the importance of fostering networks of small firms in developing countries as a means of entering new markets.

Keywords: Global Automotive Industry value Chain, auto industry the impact of globalization processes; assembly sectors, components production, emerging markets, local producers, regional trade agreements, regional production systems, component industry

JEL Classification: D2, D23, F2, F23, L1, L6, L16, L22, L62, O14

Suggested Citation

Humphrey, John and Memedovic, Olga, The Global Automotive Industry Value Chain: What Prospects for Upgrading by Developing Countries. UNIDO Sectorial Studies Series Working Paper. Available at SSRN: https://ssrn.com/abstract=424560 or http://dx.doi.org/10.2139/ssrn.424560

John Humphrey

University of Sussex - Institute of Development Studies ( email )

Brighton
Falmer, Brighton, East Sussex BN1 9RE
United Kingdom
+4412 7367 8671 (Phone)
+4412 7362 1202 (Fax)

Olga Memedovic (Contact Author)

United Nations Industrial Development Organisation - Strategic Research and Economics ( email )

Vienna International Centre, P.O. Box 400
Vienna, A-1440
Austria
+(43)1 26026 4676 (Phone)
+(43)1 26026 6859 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
7,372
Abstract Views
27,417
rank
749
PlumX Metrics