Global Value Chains and the competitiveness of Canadian Manufacturing SMEs

Publication Type: 
Volume: 
10
Number: 
2
Published On: 
2013

Global value chain (GVC) has changed the manufacturing paradigm during the last two decades. Instead of producing complete goods, manufacturing activities or tasks are organized along the trans-border value chain called global production network (GPN). The objective of this paper is to demonstrate the state of the art and strategic orientation for competitiveness of Canadian manufacturing SMEs production in context of the GVC framework. Analysis of the data from industry Canada, WTO and OECD shows that the competitiveness of Canadian manufacturing sectors, where Canada does not possess natural resources for raw materials, are highly depended on participation into the GVC. Through exploration of the Canadian participation into the GVC, the strategic importance of the GVC for Canadian manufacturing sector was highlighted. The study concludes that the competitiveness of Canadian manufacturing depends on integrating into the GVC in manufacturing. That is to say that the overall manufacturing competitiveness depends on collaborative production network both local production activities with those from foreign activities. Manufacturing small and medium size enterprises (SMEs) need to focus on activities or tasks where they have comparative advantages and procure intermediate components through market based arrangements from foreign sources on competitive basis. The re-industrialization policies need to be developed in the co-industrialization framework among the complementary firms rather than local vs. foreign mindset of the past. Public policy should focus on facilitating exchanges among the actors producing complementary activities and collaborate with the private sectors while formulating policies.