The Limits to Upgrading and Value Capture in R&D Global Value Chains Indian and Chinese Contract R&D Firms in the Integrated Circuit Design and Pharmaceutical Gvcs

This paper analyses the integrated circuit and pharmaceutical GVCs to determine the scope of technical upgrading and value capture achieved by Chinese and Indian contract R&D firms within these GVCs. There are three main findings. First, the two sectors differ significantly in terms of the upgrading of the contract firms’ R&D activities and capabilities with more upgrading found in pharmaceuticals than in ICs. Second, in both industries MNCs have proven adept at controlling and limiting value capture by contract firms. Third, certain GVC characteristics (value chain governance), level of R&D uncertainty (risk) and MNC market access control inform the strategies of MNCs which in turn help shape certain GVC characteristics (linkages) the MNCs use, and consequently, heavily influence the upgrading and value capture outcomes