The Impact of Economic Upgrading on Social Upgrading : Evidence from Thailand's Processed Food Value Chain

In global value chains (GVCs) analysis, controversy over the relationship between economic and social upgrading remains. Many studies argue that economic upgrading (it consists of product, process, functional, and inter-sectoral upgrading) does not always generate social upgrading in developing countries, although they are key exporters and producers of traded processed foods. Neglecting labor issues (both measurable and non-measurable aspects) can be a serious problem for the countries as key global buyers pay more attention to these. This study examines the impact of economic upgrading on social upgrading (both country-and firm levels analysis) in the Thai processed food sector. Our key findings show mixed results. That is, product upgrading has a negative impact on social upgrading. This result can explain that the Thai processed food sector tends to become engaged in a ‘race to the bottom’. They attempt to reduce their product cost (i.e., lowering wages) to keep competitiveness in global markets. In contrast, the lagged variable of function upgrading is positively significant for social upgrading. Moreover, the study finds a negative relationship between economic and social upgrading indicators of 28 listed firms in Thailand’s processed food sector