The Impact of Privatisation on Technological Upgrading: A Case Study

Abstract

This paper investigates the trajectory of Zambia's local supply chain to the copper mining sector. The policies adopted in the 1990s under the Structural Adjustment Programme succeeded in attracting much-needed foreign direct investment (FDI) to the mining sector. Nevertheless, state withdrawal from industrial policies aimed at correcting market failures meant that supply firms were no longer supported in developing technological capabilities, and accessing skills and capital. This, in turn, had a negative impact on the level of value-addition undertaken by local suppliers. Therefore, after privatisation, value chain governance became critical in supporting supply firms' upgrading. Drawing on firm-level data, this paper analyses the role of firm ownership and value chain governance in shaping local upgrading trajectories.