The effect of local content requirements industrial policy in development of automotive industry in the global value chain: a comparative analysis of China and Mexico
Subject Areas :Fereshte Gholami 1 , Hosein Aslipour 2 , Gholamreza Kazemian 3 , Saeed Zarandi 4
1 - IKCO, Strategy Expert
2 -
3 - Associate Prof., Faculty of management and Accounting, Allameh Tabataba'I University, Tehran,Iran
4 - Assistant professor, Allame Tabatabaei
Keywords: Keywords: Comparative policy analysis, Industrial policy, Local content requirements, Global value chain, Automobile industry.,
Abstract :
Fereshte Gholami Hossein Aslipour Gholamreza Kazemian Shirvan Saeed Zarandi Abstract With reference to comparative policy studies and the level of competitiveness throughout the global value chain (GVCs), the effect of related policies can be traced. This article aims at studying industrial policy of local content requirements (LCRs), which are among the most prevalent as well as primary policiese used in any development model. This has been done to study the effect of LCRs on upgrading the position of a country’s automotive industry concerning GVCs through a variable- oriented approach. China and Mexico have been picked out in accordance with sample selection approach in the systems encompassing a great deal of similarities as well as the most similar outcomes. Further to the historical review of the development process of the automotive industry, focusing on the LCRs policy, the effect of this policy on the three indicators FVASH, REII and DVAFXSH has been carried out by logistic regression. These indicators determine the level of competitiveness throughout GVCs. The logistic regression shows a significant logit relationship between the LCRs policy status and the DVAFXSH variable, but no significant relationship is observed for the other two variables. The trend review also shows that after the implementation and removal of LCRs, the FVASH and REII indices have not changed much, but the DVAFXSH has increased, especially in Mexico.It shows that the systematic implementation of LCRs can have significant effects in upgrading the position of countries in GVCs in the automotive sector, through DVAFXSH.
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