Global Value Chains and Social Upgrading of Clusters: Lessons from Two Cases of Fair Trade in the Brazilian Northeast

Abstract

This article analyses how cluster integration in global value chains affects social upgrading processes in two local industrial districts in the agro-industrial sector (oil for cosmetics and organic honey) located in the Northeast of Brazil, which are both involved in fair trade relations with foreign clients. Several lessons are drawn on the basis of these case studies in relation to how economic upgrading can be aligned with social upgrading in local cluster settings. We conclude that global value chain linkages cannot alone explain the social upgrading processes that we observe in these cases. The presence of strong local organizations was key in driving social upgrading processes both prior to and after the insertion of both industrial clusters into the global economy.

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