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This paper is based on a review of the literature that brings together GVCs, green and digital transformations. Or to be more precise, the analysis is based on three main components: (a) the greening of GVCs and environmental upgrading; (b) the digital transformation of manufacturing GVCs and (c) an initial exploration of the green and digital joint transformations in GVCs. The aim is to provide a framework bringing together environmental upgrading and digital technologies in manufacturing GVCs. We find that the greening of the global value chains in manufacturing industries unfold in analytically separable steps: a) new patterns of demand preferences and consumer behaviours, b) new green strategies by lead firms and global buyers and c) enforcement of environmental standards and associated patterns of upgrading and downgrading across global supply bases. Digitalization in manufacturing GVCs have differentiated effects across the Global South. The importation and adoption of advanced digital technologies is still limited to a small number of countries (the so-called emerging economies) and their production at any scale is limited to an even smaller set of advanced economies plus China. Across most of the Global South, adoption rates of smart manufacturing and service technologies as well new technologies for data processing and analysis are very low and many firms still face challenges with adopting much older manufacturing and service technologies. Still very little is known about the extent to which key enabling digital technologies support the process of environmental upgrading in the Global South firms that are inserted into GVCs. This is because these techno-institutional waves are still concentrated geographically and the full extent of the ramifications across the Global South remains to be seen. This also means that synergy-creation is challenging. The small pool of literature identified for this study suggests that potentials are mainly limited to certain digital technologies and specific types of environmental upgrading. These insights are anyhow useful because they may help to early direct the efforts of policymakers towards the more likely opportunities.

The green transformation has profound implications for the global economy and, hence, for the prospects for latecomer development. In this paper we review the insights derived from case studies of developing countries’ green technology experience. We conduct a systematic literature review covering seven key technologies. This allows us to examine whether the green economy offers new opportunities for latecomer development and their ability to seize these opportunities. To understand how developing countries’ capacities to exploit these opportunities differ across cases, we focus on sectoral systems and, particularly, on (a) preconditions allowing exploitation of these opportunities, and (b) strategic responses of public and private actors in this respect. We identify four different scenarios: (1) effective opportunity exploitation; (2) missed opportunities; (3) active approach; and (4) distant opportunities. We conclude by assessing the options for policy to support developing countries in their efforts to encourage green development strategies, focusing on both the provision and augmentation of opportunities and construction of the requisite sectoral production and innovation systems.

This paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all Foreign Direct Investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm-level characteristics in investment decisions. The empirical results show that - other things being equal - MNEs prefer acquisitions to control activities in regions with stronger investment eco-systems, while they choose greenfield investments in regions with weaker systemic conditions. Moreover, the regional quality of government makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local and regional policy makers can attract higher quality FDI to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI.

Global value chains (GVCs) have taken the policy world by storm, with many policymakers viewing them as potent tools to boost economic development through industrial upgrading. In this Perspective, the authors argue that zooming in on the roles of tasks, linkages and firms helps clarify the novelty of GVC-oriented policies.