"Spurred to Upgrade: A Review of Triggers of Change in the Global Value Chain Literature."

This paper assesses the role of firm-level decisionmaking in the perpetuation of middle-income traps by evaluating the proposition that conditions of “systemic vulnerability” are necessary to induce firms who operate under imperfect competition to voluntarily seek to innovate. To do so, we systematically review the Global Value Chain (GVC) literature’s case studies of successful industrial upgrading in inertial environments. Building on our previous theoretical work, we examine the extent to which three different sources of systemic pressure - a shock in demand, changing sectoral competitiveness and civil/social conflict - consistently trigger business model upgrading in three areas: market niches, production processes and industrial relations. Our work represents the first systematic review of the GVC case study literature, allowing a unique, empirically-driven synthesis of what the literature  can offer regarding the sources of one of its central outcomes of interest, upgrading. It also points to a strengthened research agenda for both the industrial policy and the GVC literatures by combining the former’s focus on robust terms-of-trade outcomes with the latter’s focus on the meso-level dynamics of firms’ interactions with their environments.