Governance analysis of the recyclable materials value chain in Cordoba, Argentina

Rio de Janeiro

Congreso; SASE 2023 Annual meeting; 2023

Society for the Advancement of Socio-Economics (SASE)

This paper performs governance analysis of the recyclable materials value chain in Cordoba city, Argentina. The Global Value Chain (GVC) approach seeks to explain or predict how the different nodes of value addition of a productive activity are linked within an economy at a territorial-spatial level (Gereffi et al., 2005), being applicable at a global level or local or regional scale (Sturgeon, 2011). Governance analysis in GVC is useful to understand how a value chain is controlled and coordinated when certain actors have more power than others (Gereffi and Fernández Stark, 2016) establishing and imposing the parameters under which the rest of actors operate (Humphrey and Schmitz, 2004; 2001). In the value chain under study, the characterization of governance is addressed, focusing on the aspects over which power is exercised. Based on this analysis, upgrading opportunities that arise for actors holding less bargaining power are identified.The selected methodology for the collection and analysis of data is qualitative, resorting to primary and secondary sources (Miles & Huberman, 1984). Primary sources included 37 interviews with representatives of waste pickers, recycling cooperatives, intermediary companies, manufacturing companies, government entities and NGOs. Secondary sources included the analysis of regulations, industry reports, websites, pieces of news and social networks.According to our research, it is observed that a critical role of power and control is exerted by the manufacturing companies, located at the end of the chain. In this way, this GVC is configured as a buyer-driven chain (Gereffi, 1994) with market governance (Gereffi et al., 2005).Commercial bargaining variables in this GVC include price, volume, consistency and quality. These conditions constitute the most relevant aspects in which leading companies exercise governance, most of them multinational companies that follow industry criteria and standards. This configuration affects recyclable materials market prices, since the leading companies participate in international trade, therefore acting as price makers for the entire chain.In an attempt to raise the price that waste pickers and recycling cooperatives get for the selling of recyclable materials, the municipality of Cordoba began to intervene in the market in 2021 by instituting ?eco-auctions?, which resulted in an average increase of 95% in the price of the recyclable materials that were sold within the auction, and at the same time set reference prices for the local market.Finally, the challenges faced by less powerful actors to achieve an upgrade within the chain are highlighted. Volume and consistency requirements depend on aspects such as technology and infrastructure availability, as well as organization?s professionalization, posing a challenge to waste pickers and recycling cooperatives. Another great challenge for cooperatives is found in value addition -be it grounding/baling of material or transforming it into new products- which could help them bypass intermediaries or enter new, less competitive markets.