Impact of Networks, Globalisation, and their Interaction with EU Strategies (INGINEUS)

Abstract:

INGINEUS addresses the evolution of global production networks (GPNs) into global innovation networks (GINs), and the impact this new process of global capitalism has on knowledge intensive activities in the EU. Global sourcing and assembly arrangements have been around for some three decades. They were principally based on efficiency considerations. Thus, multinational firms (MNCs) outsourced parts of production processes to manufacturers in Asia and other low-cost locations around the globe, while retaining the most knowledge intensive assets in the home country.This is no longer the case. MNCs increasingly scout the globe for locations where the right mix of local competences allows them to tap into sophisticated parts of value chains. This is not limited to advanced economies but more and more involves firms and regions in selected developing countries that position themselves as attractive knowledge-intensive locations in their own right. INGINEUS studies the determinants of this process and analyses its implications both for the EU and its emerging partner countries in the developing world.First, it looks at the changing strategies of MNCs and the conditions under which it is favourable for them to offshore R&D and other knowledge-intensive parts of their production process. Second, it focuses on the evolving local capabilities in selected developing countries that allow them to claim increasingly complex parts of global value chains at much higher levels of technological sophistication than hitherto. Third, it analyses the consequences of the formation of GINs in the global economy and differentiates among their static and dynamic effects on growth, employment, and competitiveness in the EU. Finally, based on these insights, it derives policy recommendations that would allow the EU to benefit from the positive features of this process while mitigating its adverse consequences.