Global networks and the reorganization of production in the clothing industry of post-socialist Ukraine

Abstract

In this article we examine how processes of globalization and the nature of emerging inter-firm relationships influence the organization of production in a post-socialist region, using the case of the clothing industry in Transcarpathia, Western Ukraine. We combine insights from two perspectives, the global commodity chain approach and the new regionalism. The focus on both institutional setting and interfirm relationships is essential in regions undergoing rapid change. In the article we also use Burt's concept of structural holes and the idea of a competence-difficulty gap to examine the nature of relationships within networks of firms, arguing that global integration can be viewed as a bridging process. The evidence comes from surveys and fieldwork conducted between 1997 and 2004, providing a longitudinal analysis of the same firms. Among other findings, we show that the difficulty of doing business locally may make relationships more stable. With respect to industrial structure, international subcontracting and joint-venture arrangements enable technological modernization in assembly and parts of preassembly, but also result in the demise of high-value added competences.