The automotive industry in developing countries and its contribution to economic development

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Abstract

Many developing and emerging economies have sought to establish a domestic automotive industry as part of their economic development strategies. This paper reviews the literature on the experiences of several of these countries and develops a success-failure spectrum of participation in the automotive global value chain (GVC) as well as an analytical framework for understanding differential performance. The success-failure spectrum is based on an understanding that for countries to benefit from establishing a national automotive industry with respect to their overall industrialization and economic development ambitions, they need to nurture a large number of local component manufacturing firms with substantial technological capabilities, while not sacrificing the international
competitiveness of the sector. The review covers all developing and emerging countries that have seen the emergence of a competitive domestic automotive industry over the last two to five decades, or in the cases of failure, attempted through significant government intervention to build up such an industry. The analytical framework interacts three sets of explanatory factors: 1) Local demand and production conditions related to economies of scale, 2) automotive GVC factors and lead firm strategies, and 3) the industrial and trade policies implemented by governments. Both the analytical framework as well as the
performance spectrum have been developed in an iterative manner, through the analysis of secondary literature on the automotive GVC and lead firms’ strategies and secondary case study literature on the automotive industries in several developing countries. The review of the secondary literature is supplemented with primary data from the author's doctoral research on the South African automotive industry. Having introduced both the performance spectrum and the analytical framework, individual country experiences are discussed in depth to demonstrate the explanatory power of the framework.
OriginalsprogEngelsk
BogserieCAE Working Paper
Vol/bind2021
Udgave nummer2
Antal sider70
ISSN2446-337X
StatusUdgivet - 15 jun. 2021

Emneord

  • Economic Development
  • Global Value Chains
  • Industrial Policy
  • Automotive industry

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