Costed Action Plan for SADC Industrialization Strategy and Roadmap 3.2 Successful Value Chain Participation a) Value Chain Positioning Successful value chain participation is about positioning within the GVC or RVC to capture value. Some countries and firms have the capabilities to capture value in upstream activities, which may be resource intensive or skills and innovation intensive. Others, with good market proximity and access as well as relatively low-cost labour can thrive in downstream processing, final products and customer services. The key drivers of positioning decisions tend to be a country (or firm’s) capabilities and the actual value chain. b) Labour Costs Although low wages may attract value chain investment and productivity is usually much higher in low-wage manufacturing than in traditional agriculture, value chain participation is likely to be a function of productivity and efficiency as reflected in unit labour costs rather than wage levels alone. Moreover, low wages for unskilled workers will not, on their own, attract investment, which will depend on market conditions, the state of physical infrastructure and, crucially, the availability and cost of appropriate skills. Above all upgrading within value chains depends not just on the availability of the requisite skills but also on the state of soft infrastructure in terms of the inputs and services in finance, technology and living conditions, in the absence of which value chain upgrading is unlikely to take place. 3.3 Criteria for Identifying Value Chain Potential in SADC A number of specific and dynamic criteria need to be satisfied for identification of potentially successful value chains within the SADC development environment. These include the following: 1. Growth Potential Growth opportunities in output, employment and exports should be disaggregated so as to assess the potential economic impact of different value chain segments in different countries. 2. Availability of and Access to Resources Linked to the growth potential, is the need for availability and access to resources. Aside from raw material and intermediate inputs, the crucial elements of successful value chain participation are financing, skills, technology, infrastructure and logistics. 30