Template-type: ReDIF-Paper 1.0 Author-Name: Lema, Rasmus Author-Email: lema@business.aau.dk Author-Workplace-Name: Aalborg University Author-Name: Pietrobelli, Carlo Author-Email: pietrobelli@merit.unu.edu Author-Workplace-Name: UNU-MERIT, and University Roma Tre Author-Name: Rabellotti, Roberta Author-Email: roberta.rabellotti@unipv.it Author-Workplace-Name: University of Pavia, and Aalborg University Title: Innovation in Global Value Chains Abstract: Developing countries are faced with significant challenges related to building and deepening their innovation capabilities. In this chapter, we focus on innovation in global value chains and on the role that such chains play in building and deepening capability. We also focus on the trajectories along which firms, once inserted into global value chains and located in developing countries, acquire or lose innovation capability. To do so, we bring together the global value chains and innovation systems approaches. Our key arguments are that global value chains interact with innovation systems in multiple ways and that these interactions have important implications for the speed, depth, and overall quality of capability building in developing-country firms. We outline five innovation capability trajectories and show how capability building at the firm level interrelates with the various ways in which global value chains and innovation systems co-evolve. Classification-JEL: F23, D23, L22, L25, O10, O32, O38 Keywords: global value chains, innovation systems, technological capabilities, innovation policy, co-evolution Series: UNU-MERIT Working Papers Creation-Date: 20181024 Number: 2018-038 File-URL: https://unu-merit.nl/publications/wppdf/2018/wp2018-038.pdf File-Format: application/pdf File-Size: 275 Kb Handle: RePEc:unm:unumer:2018038