Upgrading potentials and challenges in commodity-based value chains: The Ivorian and Ghanaian cocoa processing sectors

A This paper presents a comparative analysis of the development of forward linkages to cocoa processing in the Ivorian and Ghanaian cocoa sectors. The paper argues that Côte d’Ivoire and Ghana were able to promote the grinding sectors with varying success in the context of shifting Global Value Chain (GVC) dynamics, foreign-direct investment (FDI) oriented industrial policies and ongoing distributional conflicts. The grinding sectors in both countries should not currently be selected as high priority sectors for strategic industrial policies, due to their enclave-like character and limited opportunities for additional linkage development, with the important exception of forward linkages to chocolate manufacturing. The recent growth of local and regional chocolate and cocoa confectionery consumption, as well as protective tariffs, have furthered functional upgrading into chocolate manufacturing of locally owned and more locally embedded foreign grinders and chocolate manufacturers. The paper concludes that the opportunities for additional forward linkage development to cocoa processing in the Ivorian and Ghanaian cocoa sectors are limited, particularly in GVCs geared to traditional end markets. Hence, the paper argues that the growing opportunities in local and regional end markets, as well as related value chains, need to be leveraged through strategic industrial policies that go beyond tax or price incentives and focus on supporting locally owned and locally embedded foreign companies.