Chapter Summary

Different societies exhibit significant variations in social and institutional structures,

including culture, polity, education, and financial regulations. These differences shape
national production and welfare regimes, labor market practices, and capacities for state
economic management. However, this approach often results in simplistic national typologies
and neglects intra-national variations. From a Global Production Network (GPN) perspective,
institutional and territorial logics are crucial for understanding global production network
actors. These logics shape why actors operate in specific ways in specific places.
Furthermore, global production networks influence the development of capitalist territorial
formations. The initial GPN framework, termed GPN 1.0, emphasizes the complex intra-,
inter-, and extra-firm networks in economic activities, structured both organizationally and
geographically. The focus is on the developmental impacts on territories interconnected
through these networks. GPN 1.0 differs from its predecessors in four main aspects: First, it
incorporates extra-firm institutions like supranational organizations, government agencies,
and NGOs, which shape firm activities, unlike the inter-firm focus in GCC/GVC frameworks.
Second, it considers interactions at all spatial scales from local to global, overcoming the
national and global focus in GVC research. Third, production systems are viewed as recursive
networks of intersecting vertical and horizontal connections, moving beyond the linear chain
notion. Fourth, it acknowledges the variable and contingent nature of governance within
global production networks, influenced by regulatory and institutional contexts.
GPN analysis operationalizes three interrelated variables: value, power, and
embeddedness. The concept of value includes surplus value from production and various
forms of economic rent, such as technological, human resource, organizational, relational,
brand, resource, policy, infrastructure, and financial rents. Power in production networks is
relational and varies according to actors' resources and mobilization. It encompasses
corporate power, institutional power from the state and supranational organizations, and
collective power from labor unions and NGOs. Embeddedness has three forms: societal,
network, and territorial. Societal embeddedness refers to the cultural, institutional, and
historical origins of economic actors, influencing their actions. Network embeddedness
pertains to the degree of connectivity and stability within a global production network.
Territorial embeddedness captures how firms and organizations are anchored in specific
places, reflecting dependencies on local resources, labor markets, and state policies. GPN
analysis posits that the sub-national region is the key locus for understanding economic
development. Regional development is a dynamic outcome of the interaction between region-
specific networks and global production networks within changing regional governance
structures. Endogenous growth factors are necessary but insufficient without complementary
strategic needs of lead firms in global production networks.
The concept of strategic coupling is central to GPN analysis. It involves intentional
interventions by both regional institutions and global production network actors to create
complementary relationships. This process is strategic, requiring active engagement from
both regional and global actors; time-space contingent, subject to change and temporary
coalitions; and transcends territorial boundaries, involving interactions across different spatial
scales. Regional development depends on the complementary relationship between regional
assets and the strategic needs of global production networks. Regional assets, such as
technology, industrial organization, and localized knowledge, need to align with the strategic
requirements of global production networks for successful development. Regional
institutions, including local arms of national bodies and extra-local institutions, play a crucial
role in facilitating this alignment.
The chapter on GPN 2.0 seeks to advance the understanding of global production
networks by addressing the limitations of the initial GPN 1.0 framework. While GPN 1.0
successfully mapped the complex networks of firms and territorial institutions involved in
economic activity, it fell short in explicating the causal mechanisms linking key elements like
value, embeddedness, and power. GPN 2.0 aims to enhance analytical precision and
explanatory power by delving deeper into these causal links and offering clearer definitions
of the constituent elements and actors within global production networks. The framework
emphasizes the underlying capitalist dynamics—costs-cum-capabilities, markets, finance, and
risk—that drive firms' strategies and shape the developmental outcomes across different
regions and industries. By developing these dynamic analyses, GPN 2.0 seeks to explain the
diverse patterns of economic development and territorial outcomes more effectively.
Moreover, GPN 2.0 retains the core ontological and epistemological foundations of its
predecessor while providing a more sophisticated theoretical toolkit. It focuses on the roles of
various actors within these networks and how their interactions shape regional development.
The framework introduces the concept of 'value capture trajectories' to understand how firms
benefit from their positions within global production networks and how these benefits
translate into regional economic development. The chapter emphasizes that GPN 2.0 is not a
fundamental departure from GPN 1.0 but an evolution that builds on its strengths while
addressing its gaps. It aims to provide a robust foundation for future empirical research and
offers practical insights for policymakers seeking to understand and influence global
economic dynamics.