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Economic upgrading is the process through which enterprises and workers move from low- value to relatively high-value activities in global supply chains. It could include process, product, functional and chain upgrading.
• Process upgrading involves changes in the production process with the objective of making it more efficient;
• Product upgrading occurs where more advanced product types are introduced, which often requires a more highly skilled workforce to make an item with enhanced features;
• Functional upgrading occurs when an enterprise increases its degree of vertical integration in the goods and services in a particular global supply chain;
• Chain upgrading occurs when an enterprise moves into new industries or product markets from a particular capability in a global supply chain.

Reference

• G. Gereffi: “The global economy: organization, governance, and development”, in N. Smelser and R. Swedberg (eds): The Handbook of Economic Sociology, Chapter 8 (Princeton University Press, 2005), p. 171.