Social Sustainability
Value Chain Upgrading
Definition
Value chain upgrading, from global value chain analysis (Gereffi, Humphrey and Sturgeon), describes how producers improve their position within chains: process upgrading (producing more efficiently or with better technology), product upgrading (moving into more sophisticated products), functional upgrading (taking on higher-value functions such as design or branding), and inter-chain upgrading (entering new chains). Upgrading is the main mechanism by which participation in global trade translates into development.
References
This reference provides supporting context for how “Value Chain Upgrading” is defined and used.
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Overview
How it is used
The typology is used in development economics, industrial policy, and analysis of how sustainability governance in value chains affects supplier firms and producing countries.
Why it matters
Where value is captured in global chains determines who benefits from trade; upgrading analysis connects sustainability standards to their development consequences.