Looking Beyond Global Value Chains in Capacity Development: The Case of the IT-Enabled Service (ITES) Sector in South Africa

This paper examines the role of learning avenues for capability development in the IT-enabled services in developing countries. It sheds light on the unexplored relationship between global value chain (GVC) learning and national innovation systems (NIS) in capability development. It explores learning avenues beyond GVCs, namely in local and regional value chains. Based on data collected from 47 interviews of IT-enabled service providers in South Africa, we find that NIS influences firms' capacity to access and adapt learning from GVCs, whereas the latter has the potential to strengthen NIS. Secondly, the majority of South African service providers in this sample do not participate in GVCs but participate in local and regional value chains instead, which are distinct yet important learning avenues and potential pathways for entering GVCs of IT-enabled services.