Failed development in global networks, exemplified by extractive industries in Bolivia and Ghana

ABSTRACT

For the World Bank, integration into the global economy is the path towards development. Its experts argue that the Global South will benefit from easing barriers to investment and trade, thus facilitating interaction between transnational corporations and local enterprises. Yet, there is growing scepticism regarding the prospects to develop in global networks. This article delves into their dark side. Following critical scholarship, the author suggests that integration into global networks is a process that creates winners and losers. It leads to uneven development. To analyse concrete mechanisms that underlie the process of failed development, he drafts a heuristic on exclusion, downgrading, and non-participation from/in global networks. This approach is tested against the backdrop of the hydrocarbon sector in Bolivia and Ghana. In Bolivia, indigenous suppliers suffer from downgrading, exclusion, and non-participation because of a recent shift to a turn-key model and sector-specific entry barriers. Ghana is marked by non-participation of local firms, mostly due to endogenous problems: corruption and institutional deficiencies, little industrialization, a high interest rate, and rent-seeking. These findings confirm that caution with regard to the possibilities to develop in global networks is justified, but they also indicate that not every development problem results from global network participation.

KEYWORDS:

• Bolivia
• dark side
• disarticulation
• Ghana
• global production network
• resource periphery

Acknowledgements

The author is grateful to Linus Kalvelage (University of Cologne) for helpful suggestions on an early draft of this article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Most demonstratively, Coe and Yeung write that Werner and others ‘have overstated the case’. They add that McGrath makes ‘clearly important observations [but] GPN analysis is adept at diagnosing global production network-related development dynamics’ (2019, 792), apparently without any refinement.

2 I understand regression of network participation not only in quantitative terms but also from a qualitative perspective. A shift from functional to structural coupling, for instance, counts as regression.

3 As a side note, Yeung (2019) also reasons that processes are contingent. Hence, processes cannot serve as an explanation. This reflects the focus of the Manchester–Singapore School on ‘little d’ development. Critical scholars, conversely, are interested in ‘big d’ development, meaning in causal relations that are not restricted to the level of individual cases.

4 YPFB has been state-owned again since 2006. It has a monopoly for downstream activities and is involved in all upstream projects. The renationalization has not changed anything about the insurances that are required from suppliers.