Global Value Chain 4.0 for economic, social, and environmental upgrading: The experience of Indonesian palm oil
B. Endo Gauh Perdana
Faculty of Social and Political Sciences Gadjah Mada University
Jalan Socio Justicia No.1, Bulaksumur, Yogyakarta 55281, Indonesia
Abstract
The Industrial Revolution 4.0 endorses a high-speed transfer of information that promotes digitalization and innovation across many sectors of industries allowing them to thrive by increasing productivity, profitability, product quality and performance. However, the utilization of digital technology, especially in agricultural sector where sustainability practices are essential to be addressed, requires effective governance for upgrading strategies. As one of the main export commodities and a key driver of the economy, the palm oil industry in Indonesia is in alert to face challenges brought by the Fourth Industrial Revolution. This research draws from the latest work of Gerrefi and Joonkoo Lee on Global Value Chain. In the framework of horizontal industrial cluster and vertical global value chain governance, the theory examines how governance and upgrading trajectories produces economic upgrading which correlates to social and environmental upgrading. This research, then argues that the role of technology supports as well as accelerates the upgrading strategies. A set of data are collected from literature of multidisciplinary perspectives in addition to statistical data on the palm oil industry. The GVC analysis of Indonesian palm oil industry will be used as a map to understand the complexity of how actors operate in every cluster of governance. Economic upgrading is not always associated with social and environmental upgrading. Therefore, a strong linkage between actors suggests that the Fourth Industrial Revolution is relevant and essential to enhance synergy to cater for economic, social and environmental dimensions in order to harness the potential of sustainable development.
Keywords: global value chain, governance, upgrading, palm oil
Topic: Digital Governance and Citizenship