By Takahiro Fukunishi (eds.)

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Source: Adapted from Gereffi et al. (2005). The governance structures posited range from market-based to hierarchical structures and vary according to the depth of inter- and intrafirm relations and the degree of explicit coordination required between firms, which is expected to increase with the complexity of the transaction; as the capabilities of producers change, so too do governance structures. For example, should producers require less support from lead firms they may begin to trade within a more relational rather than captive form of governance.

Clearly, this definition is broad, but at the same time highly simplified. This is because it may be difficult to clearly delineate a single value chain which may contain several different strands and types of end product for a given commodity, as well as multiple actors. Despite these challenges however, identifying the value chain by tracing production through to consumption in discrete steps is typically the first step in the methodology; each stage of production is defined as a value chain ‘node’.

2002) (Cameroon, Côte d’Ivoire, Nigeria and Senegal). 5. Note that empirical studies measuring the effect of FDI through productivity growth of local firms show mixed results. Crespo and Fôtoura (2007) provide accounts for the gap between the result of case studies and econometric studies. 6. See Chapter 2 for prospects of functional upgrading in Africa and developing countries. 7. We do not explore the reasons why local and regional markets are less risky for local producers. One explanation is that local producers have an advantage in those markets due to proximity (low transportation costs) or better understanding of local tastes, reducing the intensity of competition.

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