Vertical specialisation or linkage development for agro-commodity value chain upgrading? The case of Malaysian palm oil

Yee-Siong Tong

Land Use Policy, 2017, vol. 68, issue C, 585-596

Abstract: Developing countries have an opportunity to create and capture higher value added by participating in global value chains (GVCs). Such potential has spawned recommendations for successive vertical specialisation but the applicability of the strategy in GVCs for agricultural commodities is rarely scrutinised. This paper examines the fundamental question of whether participation and upgrading in agro-commodity value chains conform to vertical specialisation and if not, how and why. The case study on the Malaysian palm oil sector suggests that upgrading is prone to sectoral linkage development and vertical integration at local lead firms. State policies and firm-specific actions since the 1970s drove attainment of capabilities which Malaysia did not possess originally in segments across the value chain for production of more sophisticated goods and services. Unique production characteristics, sectoral dynamics and historical settings of agro-commodity value chains explain the trajectory. The study suggests that vertical specialisation is less applicable across all GVC types than thought, and that development policy and research should delve more into hindrances to linkage development in similar additive value chains.

Keywords: Global value chain; Industrial upgrading; Vertical specialisation; Linkage development; Vertical integration; Agricultural commodity; Malaysia (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:lauspo:v:68:y:2017:i:c:p:585-596

DOI: 10.1016/j.landusepol.2017.08.020

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