Costed Action Plan for SADC Industrialization Strategy and Roadmap apposite in low income countries where infrastructure is poor and where natural resources, skills and capital are in scarce supply. One popular route to FDI participation is the establishment of Export Processing Zones or Special Economic Zones where investors – not only foreign – are attracted by the provision of essential infrastructure and a variety of incentive packages. An alternative, often complementary, strategy is domestic and regional facilitation in the form of partner assistance packages (to assist domestic and foreign firms in the identification of value chain partners) export promotion schemes and arranging trade and investment missions to and from other countries. (ii) Embedding RVCs and GVCs in the domestic economy Integrating global and regional value chains in the domestic economy – densification – is fundamental to the maximisation of domestic value addition. It includes the creation of more and better-quality jobs, value chain upgrading and fostering technological and other spill-overs from FDI. There is a central role for the state in building absorptive capacity in the economy via productivity gains and investment in human capital (skills) and physical capital (infrastructure). 6.11 Value Chain Governance Where value chain governance is strongly hierarchical, as is usually the case with FDI projects, this may inhibit efforts by host country affiliates to upgrade and diversify. Over time, as affiliates acquire experience and skills, so the relationship with offshore partners and owners changes thereby enabling host firms to upgrade. However, there is no guarantee that this will occur and there is therefore a very real danger of SADC firms becoming locked into low-technology, low-productivity, undiversified activities. Policies to tackle this problem should be developed in co-operation with investors and value chain partners. 6.12 Co-operation with the Private Sector: Discovery and Dialogue Value-chain policy differs from macroeconomic development strategies in its focus on the micro-level – dialogue with individual enterprises and industry associations. It is difficult enough for policymakers with hands-on experience of industry to ”pick winners” by prioritizing value chains, but much harder to ”pick tasks” at firm level. Policymakers must decide what to prioritize – value chains or links in value chains – while accumulating the knowledge base to be able to make such choices against a background of rapid technological change and volatile exchange rates and market conditions globally. Efficient value chain decision-making is dependent on ongoing and 50