What can we learn from the economic and social realms of global value chain? Evidence from the Indonesian electronics industry

This paper describes and analyzes the current state of the electronics industry in Indonesia. It analyzes the close links between economic and social upgrading in the Global Value Chain (GVC). Previous studies, have mostly focused on finding ways to improve the economy, while the social issues have not been addressed. Economists have found that an increase in FDI and exports indicates industrial development and a deeply integrated GVC. This is called economic upgrading. Furthermore, economists believe that increasing in workers’ salaries and allowances to improve workers’ living standards indicates social upgrading. The electronics industry is among the few industries that have become Indonesia’s top priority in industrial development until 2025. Furthermore, it is the main international trade activity in most countries of ASEAN and East Asia. The paper uses the parsimonious measurement approach that refers to economic and social indices comprising of four dimensions of growth i.e., high-road, and low-road growth; high-road, and lowroad decline to examine the performance of the Indonesian electronics industry during 2000-2014 and clarify whether economic and social upgrading or downgrading occurred.It finds that the industry has experienced economic and social downgrading, in other words, it is positioned in the dimension of low-road decline dimension.