SOAS Research Online

Abstract

Regional integration is increasingly viewed by policymakers as a key driver of industrial development, yet there is a lack of academic research on the key channels by which this is supposed to occur. This gap is addressed through examining firstly the impact of regional cooperation on policy space, secondly the potential for industrial upgrading in regional value chains, and thirdly how policy space and upgrading are linked through specific industrial policy rents at the national, regional and global levels. The research takes the East African Community (EAC) as a case study, with a particular focus on the textiles and apparel (T&A) subsectors. Fieldwork was carried out in Tanzania and Kenya consisting of a firm survey and semi-structured interviews with industry stakeholders. Policy space is necessary to allow states to implement industrial policies, but there is little agreement about its definition or analysis. The thesis proposes a conceptual framework for industrial policy space, defined as the set of legally permitted, economically viable and politico-institutionally feasible policy options at the national, regional and global levels which can promote industrialisation of an economy. This framework is then used to analyse policy space in the EAC T&A sector. Contrary to the literature which sees regional cooperation between countries in the South as having a negligible or positive effect on policy space, we argue that the impact of the EAC on members’ policy space in the T&A sector has been significant, and both positive and negative across different dimensions. The purpose of industrial policy space, industrialisation, is increasingly understood by scholars as a process of industrial upgrading in value chains. With increased regionalisation of trade, regional value chains (RVCs) and national value chains (NVCs) have emerged as possible alternatives to global value chains (GVCs) for countries pursuing late industrialisation. In presenting the firm survey results we introduce the concept of value chain directionality, arguing that NVCs, RVCs and GVCs each offer distinct opportunities in terms of functional, product, process and end market upgrading. Explaining these results, we develop a multi-scalar approach to industrial policy analysis and argue that rents at the national, regional and global levels were critical to the investment and upgrading decisions of firms integrated into NVCs, RVCs and GVCs.