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Vertical specialisation or linkage development for agro-commodity value chain upgrading? The case of Malaysian palm oil

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  • Tong, Yee-Siong

Abstract

Developing countries have an opportunity to create and capture higher value added by participating in global value chains (GVCs). Such potential has spawned recommendations for successive vertical specialisation but the applicability of the strategy in GVCs for agricultural commodities is rarely scrutinised. This paper examines the fundamental question of whether participation and upgrading in agro-commodity value chains conform to vertical specialisation and if not, how and why. The case study on the Malaysian palm oil sector suggests that upgrading is prone to sectoral linkage development and vertical integration at local lead firms. State policies and firm-specific actions since the 1970s drove attainment of capabilities which Malaysia did not possess originally in segments across the value chain for production of more sophisticated goods and services. Unique production characteristics, sectoral dynamics and historical settings of agro-commodity value chains explain the trajectory. The study suggests that vertical specialisation is less applicable across all GVC types than thought, and that development policy and research should delve more into hindrances to linkage development in similar additive value chains.

Suggested Citation

  • Tong, Yee-Siong, 2017. "Vertical specialisation or linkage development for agro-commodity value chain upgrading? The case of Malaysian palm oil," Land Use Policy, Elsevier, vol. 68(C), pages 585-596.
    • Handle: RePEc:eee:lauspo:v:68:y:2017:i:c:p:585-596
    DOI: 10.1016/j.landusepol.2017.08.020
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    Cited by:

    1. Zhiheng Wu & Guisheng Hou & Baogui Xin, 2020. "Has the Belt and Road Initiative Brought New Opportunities to Countries Along the Routes to Participate in Global Value Chains?," SAGE Open, , vol. 10(1), pages 21582440209, January.
    2. da Silva Medina, Gabriel & Pokorny, Benno, 2022. "Agro-industrial development: Lessons from Brazil," Land Use Policy, Elsevier, vol. 120(C).
    3. Mohammad Nishat Akhtar & Emaad Ansari & Syed Sahal Nazli Alhady & Elmi Abu Bakar, 2023. "Leveraging on Advanced Remote Sensing- and Artificial Intelligence-Based Technologies to Manage Palm Oil Plantation for Current Global Scenario: A Review," Agriculture, MDPI, vol. 13(2), pages 1-26, February.

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