What is the “Global Assembly Line?” • Multinational or transnational corporations (MNCs or TNCs) • “Economic globalization” • Enabled by modern ICTs • “just in time production” • Back offices in foreign countries • “Export Processing Zones” • Multiple locations • “Global Assembly Line”
Commodity Chains • Production contractors • Factories not owned by retailer • Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI) • Investing directly in production in another country, either by buying a company there or establishing new operations of an existing business. • Done mostly by companies (as opposed to financial institutions, which prefer indirect investment abroad such as buying shares of stock or public bonds.
FDI and trade • Complementary with trade • Factory can serve surrounding region • Services need to be located abroad • Alternative to trade: • Avoid barriers to trade • “Transfer pricing”
Basic Premise: Difference in Wage Rates • Average wages of workers who made Suburbans in the late 1990’s • U.S. $18.96/hr. • Mexico $1.54/hr.
Labor costs of a $100 shoe • 40 cents
Globe-trotting Nike: “downward leveling” • Early 1960s - Oregon • 1967 – Japan • 1972 - S. Korea and Taiwan • 1986 – Indonesia, ChinaandThailand • 1994 – Vietnam • 2000-China
Industrial relocation decisions: non-labor factors • Government incentives and regulations • Provision of infrastructure (Export Processing Zones) • Reduced cost of land, water, electricity • Tax breaks and tariff reductions • Lower environmental pollution standards • Lower health and safety standards
Global Production: Social Issues • Health and Safety of Workers • Coercive Working Conditions • Anti Union Environment • Government Involvement in Coercion and Lack of Participation/Democracy in Decision making • Child Labor http://www.ilo.org/public/english/standards/decl/intro/ilo_movie/index.htm
Economic success stories • NICS: Newly Industrialized Countries • “Asian Tigers” • Singapore • Hong Kong • Taiwan • South Korea • Malaysia • Thailand • Korea video
Korea: Creation of New Comparative Advantage • “Developmentalist state”/sometimes authoritarian • Strategy • Major land reform in the rural areas • Started with Import Substitution Industrialization (ISI) • Moved to Export Oriented Industrialization (EOI) • Numerous subsidies for EOI industrialization
Korea: Creation of New Comparative Advantage • Cultural and political strategies • Created strong national identity of independence • Workplace culture: teamwork • Suppression of labor unions and social movements • High levels of US Foreign Aid (geopolitical motivations in region) • More recently: democratic reforms
The Globalization Debate: key questions • What is globalization?/ How should it be conceptualized? • Is it really that new? • How does contemporary globalization change politics? • state power? • other scales of power and sovereignty • How can globalization be democratized? • Where is global change going?
The Globalization Debate • Agreement on changes in interconnectedness • Disagreement on how to characterize the process and the power relations: • Conceptualization: how do we think about/imagine it? • at which scale? • Over what time frame? • Impacts? • Trajectories? Where is global change headed?
Alternative Perspectives • The Hyperglobalist Perspective • The Skeptical Perspective • The Transformationalist Perspective
Hyperglobalist Thesis • A Global Age: McDonaldization • New Unprecedented Era in which global interconnectivity will dominate political relations • It’s about the economy, stupid! • Global capitalism/International division of labor • Reduction of State Sovereignty • “Borderless World” (Ken Ohmae) • “Hollowing out of the State”
Hyperglobalist Thesis • Both supporters and critics are in agreement that globalization is the driving phenomenon in the world today
Hyperglobalist Boosters • Problems, yes; but whole world will improve economically, politically and socially • Free trade raises all ships • Trickle down of economic prosperity • Will promote democratization • Will promote social equality • World will become more peaceful and cooperative
Hyperglobalist Critics • Critics: Globalization creates uneven development; need to consider social and political aspects of development too. • Increasing inequalities • inside countries • internationally • Increasing homogeneity of culture • Monopolization of public space by private interests • Reduction in the democratic process
The Skeptics Thesis • Globalization is a myth or a discourse • Global corporation is a myth • No real new international division of labor • World is actually less interdependent • It’s a project of the West/powerful countries
The Skeptics Thesis • State is still a player: “National Interest” • Regionalization and Fragmentation • Three major trading blocks linked to national governments remain powerful: North America, Europe and Asia-Pacific • Economic marginalization leads to fragmentation and growth of fundamentalism
Transformationalist Thesis • New architecture of world order • New patterns of stratification among political actors • State, NGOs, Civil Society, Transnational and Global Governance • No clear end point: open ended, non teleological • New opportunities • State becomes a catalyzer
Doreen Massey: Globalization Skeptic • Professor of Geography at Open University, London • Theorization of Space and Place constructed through networks of power • Hettner Lecture:“Imagining Globalization” • http://www.uni-heidelberg.de/media/geographie/Hettner1998.html