Building International Industrial Competitiveness through Global Production Networks
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Abstract
This paper examines the relationships between global value chains (GVCs), foreign direct investment (FDI), and international industrial competitiveness in a context characterized by technological transformation, production fragmentation, and recurring supply-chain disruptions. The literature reviewed shows that participation in international production networks does not automatically generate industrial upgrading. Competitive outcomes depend on countries’ positions within value chains, their capacity to capture domestic value added, the technological capabilities of firms, and the strength of domestic supplier networks. FDI can contribute to productivity and technological development through supplier linkages, knowledge transmission, competition, and labor mobility, but these effects remain conditional on absorptive capacity, institutional quality, and multinational sourcing strategies. The paper also emphasizes the renewed role of industrial policy in supporting structural transformation, technological learning, resilience, and strategic positioning within global production networks. Recent disruptions further demonstrate that competitiveness must combine efficiency with supply-chain resilience, diversification, and organizational flexibility. Overall, the literature suggests that sustainable industrial competitiveness results not from international integration alone but from the capacity to transform GVC and FDI participation into domestic technological accumulation, productive upgrading, stronger local linkages, and improved value capture.
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