Institutions and Economies <div align="justify"> <p>Institutions and Economies is a peer reviewed journal published by the Faculty of Business and Economics (formerly Faculty of Economics and Administration), University of Malaya. The journal is published four times a year, in January, April, July and October. The journal publishes research articles and book reviews. Only original articles that are not under consideration by other publishers are welcome. Special issues are also welcome but interested special issue editors must submit a proposal to the Editor-In-Chief for consideration. The journal is indexed in SCOPUS, IDEAS, MYCite, ECONPapers, ASEAN Citation Index (ACI), EBSCO and Asian Digital Library. Institutions and Economies is a recipient of the CREAM Award 2016 by the Ministry of Higher Education Malaysia.</p> <p>Print ISSN: 2232 - 1640<br />E - ISSN: 2232 - 1349 </p> <p> </p> <p><strong>Peer Review Statement </strong></p> <p><strong><em>All research articles in the journal have undergone rigorous peer review. The process consists of an initial screening by the</em> <em>Editor-In-Chief, Deputy Editor and</em><em> Associate Editors, followed by double-blind refereeing: two reviewers for articles. 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In these cases, specific written permission must first be obtained from the publishers.</p> Catching Up Along the Global Value Chain in Asia: Strategies and Implications VGR Chandran Angathevar Baskaran Sonia Kumari Selvarajan Copyright (c) 2023 2023-10-01 2023-10-01 1 6 Thailand and the Middle-Income Trap: An Analysis from the Global Value Chain Perspective <p>The study provides a critical analysis through the lens of the global value<br>chain (GVC) framework with empirical data on value-added trade to explain Thailand's<br>middle-income trap (MIT) by matching GVC data at the firm, industry, and country<br>levels with the economic development trajectory. The results show that participation in<br>GVCs contributes to initial industrialisation and economic development. However, it<br>does not guarantee subsequent technological upgrading, as there is a risk of falling into<br>the middle-income technology trap (MITT). Thailand is highly dependent on passive<br>technology and specialisation imposed by headquartered countries, trapping the country<br>in the middle of value chains with limited knowledge and technology transfer. As a result,<br>Thailand has fallen into the MITT, where it cannot sustain growth and catch up with<br>the more innovative advanced economies, leading to it falling into the MIT. To escape<br>both traps, the government can consider policies that address inadequate knowledge and<br>technology transfer and the lack of capacity of local firms.</p> Upalat Korwatanasakul Copyright (c) 2023 2023-10-01 2023-10-01 7 33 10.22452/IJIE.vol15no4.1 Global Value Chain Participation and Labour Productivity among Manufacturing Firms in Vietnam <p>This study assesses the state of global value chain (GVC) participation<br>by manufacturing firms in Vietnam and examines the impact of GVC participation<br>on labour productivity. Utilising firm-level data from the Vietnam Technology and<br>Competitiveness Survey and Vietnam Enterprise Survey from 2009 to 2018, we<br>employ panel fixed-effect regression to analyse the dynamics. The findings show that<br>Vietnam’s GVC participation has been driven mainly by backward rather than forward<br>linkages, signifying a reliance on foreign inputs for exports. The study found a positive<br>impact of backward and forward GVC participation on labour productivity. However,<br>the results show a stark contrast when considering the degree of GVC participation<br>(i.e. GVC participation index). While forward GVC participation positively impacts<br>labour productivity, backward GVC participation demonstrates a negative effect. The<br>results partly reject the learning-to-learn hypothesis while supporting the notion that<br>productivity improvements in Vietnam are associated with learning-by-exporting and<br>learning-by-supplying. We suggest that the prioritisation of forward GVC participation<br>should be accompanied by well-designed backward participation strategies to promote<br>labour productivity. The study concludes with a few policy implications.</p> Tran Thi Hue Upalat Korwatanasakul Copyright (c) 2023 2023-10-01 2023-10-01 35 62 10.22452/IJIE.vol15no4.2 Upgrading and Reconstruction of Global Value Chain: Case of Chinese Firm’s Catching Up Trajectory <p>This study aims to evaluate and, more importantly, examine the path of a<br>successful young Chinese high-tech firm in upgrading and reconstructing its position<br>in the global value chain (GVC) of the chip industry. We examine the existing GVC<br>positions of chip firms, the motivations for the firm’s entry into the market, the choice<br>of path to upgrading, and the attempt to restructure the GVCs. The study uses a<br>qualitative approach, mainly interviews and secondary data. The findings suggest that<br>devising and consistently implementing a targeted differentiation strategy, overcoming<br>technological bottlenecks and developing products towards a high-value location, and<br>targeting customers through open innovation and entrepreneurship are key for laggards<br>to improve their position in the GVCs. Building an ecological alliance based on the<br>existing ecosystem is an important means for upgrading a firm and rebuilding the GVC.<br>This is possible for young firms in the emerging segments of Industry 4.0, which are<br>moving into a highly digitised world where there are numerous market opportunities both<br>internally and globally. We argue that the ability to upgrade requires not only internal<br>capabilities, but also the creation of appropriate markets to support the development of<br>capabilities. Our study also provides some managerial implications.</p> Mingfeng Tang Lulu Kong VGR Chandran Angathevar Baskaran Copyright (c) 2023 2023-10-01 2023-10-01 63 86 10.22452/IJIE.vol15no4.3 Spatial Re-Localisation in Global Value Chains and Global Production Networks: Path Creation Perspective <p>The article provides insights into the drivers of spatial re-localisation within<br>the production networks of the solar photovoltaic (PV) industry. In doing so, we combine<br>the perspectives of Global Value Chain (GVC), Global Production Network (GPN)<br>and institutional path creation perspective to analyse the relocation and upgrading of<br>multinational corporations (MNCs) in Malaysia using interviews and trade data. Our<br>findings show that institutional path creation has helped to promote the completeness<br>of the entire solar PV value chain in Malaysia, with the state actively intervening and<br>creating new pathways by learning from the experience of the electronics industry,<br>especially in the pre-foundation phase. Nevertheless, the path creation is also limited in<br>that they have only been able to open windows of investment and trade opportunities<br>within the different segments of the GVC without doing much to promote technological<br>learning and spillover effects as the governance structure of the value chain is integrated.<br>We find that other factors are less helpful in promoting local spillovers – exportoriented<br>policies, energy policies and domestic industry dynamics due to lack of policy<br>coordination. The results draw attention to some important issues that deserve closer<br>consideration and contribute to the theoretical discussion within the GVC and GPN<br>literature. First, path creation occurs at both levels - at the level of institutions and at the<br>level of firms’ strategic decisions. Second, institutional path creation acts as exogenous<br>shocks to firm path creation leading to different strategic choices, and the two reinforce<br>each other. In other words, we have shown the complexity of path creation in the context<br>of GVC and GPN. Third, institutional path creation is subject to dynamic coordination<br>among agencies, without which path formation is constrained.</p> VGR Chandran Sonia Kumari Selvarajan Wong Pui Wah Sarpaneswaran Subramaniam Copyright (c) 2023 2023-10-01 2023-10-01 87 112 10.22452/IJIE.vol15no4.4 Upgrading within Global Value Chains and Innovation Capabilities: Lessons from Indian Information Technology Sector <p>This study examines the process, nature, and drivers of upgrading among<br>Indian information technology (IT) services firms in the global value chain (GVC) by<br>analysing the sector as a whole and examining three cases – Tata Consultancy Services<br>(TCS), Infosys and Wipro. It uses a qualitative research approach and data obtained from<br>secondary sources such as the Organization for Economic Co-operation and Development<br>(OECD) Trade in Value Added (TiVA) online database, company websites and annual<br>reports. The study found that the contribution of India’s IT sector to GVC is relatively<br>high among service sectors. It is increasingly delivering high-value products, reflecting<br>its upgrading within the GVC. Indian IT firms have gradually transformed from being<br>subcontractors providing low-value-added products and services to providing complete<br>projects and solutions. The three cases show that upgrading of India’s IT firms was<br>mainly due to continuous efforts to build innovation capacity by forging partnerships<br>with other technology leaders, start-ups, and academic institutions, and through<br>acquisitions. India needs to design specific industrial policy with enabling institutions<br>to increase domestic value-added (DVA) and develop a foreign direct investment (FDI)<br>policy that focuses on attracting multinational corporations (MNCs) with GVC linkages.</p> Swati Mehta Angathevar Baskaran Copyright (c) 2023 2023-10-01 2023-10-01 113 140 10.22452/IJIE.vol15no4.5