Developing local industries and global value chains: The case of offshore wind

Adriaan van der Loos, Rowan Langeveld, Marko Hekkert, Simona Negro and Bernhard Truffer

Technological Forecasting and Social Change, 2022, vol. 174, issue C

Abstract: Renewable energy sectors are becoming increasingly globalized with lead firms appropriating value on a global scale: This creates challenges for nations seeking to anchor some of the value locally through indigenous industrial development. Since lead firms select their suppliers for a given deployment project, national governments can set incentives for these firms to opt for local suppliers. We use the case of offshore wind in Europe to quantitatively measure the origin of suppliers across three global value chain governance modes: market, modular and relational. Suppliers can originate from the windfarm country, the lead firm's country or the global market. We test supplier selection across the modes of governance, domestic market size and local content push using a database of over 12,000 supplier contracts. The results indicate that lead firms mostly draw from the global market for market-coordinated segments, while favoring local suppliers under local content regulations. Local lead firms have a higher tendency to source locally for both market and relationally coordinated suppliers. However, local content push reduces the tendency of local lead firms to select local relational suppliers. Therefore, local content requirements seem to be broadly successful to stimulate locally sourced suppliers of the market-coordinated type; on the other hand, our results show that national governments should have local lead firms commission projects without imposing local content regulations to increase the odds that local relational suppliers are selected.

Keywords: Global value chains; Value chain governance; Local industry growth; Offshore wind; Local content regulations (LCR) (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:174:y:2022:i:c:s004016252100682x

DOI: 10.1016/j.techfore.2021.121248

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