Working paper 108
Two parallel tracks of research on economic transformation in developing countries have operated at a distance from each other over the last two decades. A global track – global value chains/global production networks (GVC/GPNs) – has focused on the increasing interconnectedness of global trading networks and has overlooked the role of the state and the explanatory power of domestic political economy. Meanwhile, a domestic track – including literature on developmental states, industrial policy and political settlements – has tended to take a methodologically nationalist perspective to examine economic transformation in developing countries, with limited reflections on external economic and political pressures. This paper contributes to an emerging stream of literature that examines how the domestic and global scales influence how developing country governments and firms tackle the challenge of economic upgrading. By combining insights from the political settlements and GVC/GPNs literature, this paper examines the Rwandan government’s attempt at upgrading its coffee production to enter specialty coffee markets. It shows how the existing GVC/GPNs literature makes an important contribution to describing how multipolar governance influences the pathways for economic upgrading in Rwanda’s coffee sector, but that even where access is granted, benefits are captive to the demands of international buyers, and gains for some have not translated across the sector. Insights from the political settlements literature showcase how domestic politics influences who benefits from insertion to GVC/GPNs and how the unequal provision of opportunities affects political stability.