Co-governing global value chains: subnational policy and industrial upgrading in the medical device cluster of Baja California, Mexico

Abstract This article examines how subnational institutions mediate global value chain (GVC) governance and shape regional upgrading trajectories. Focusing on the medical device cluster in Baja California, Mexico, it develops a cluster-GVC framework that conceptualizes “subnational co-governance” as a mediating layer between vertical lead-firm control and horizontal coordination. Using qualitative fieldwork and comparative analysis with Ireland and Costa Rica, the study shows upgrading is co-produced through firm strategies and policy frameworks rather than driven by firms alone. Subnational policy capabilities widen upgrading space and enhance resilience but operate within global asymmetries, refining GVC theory by embedding governance in multi-scalar institutional architectures.