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The Global Assembly Line

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  1. The Global Assembly Line

  2. Volkswagen’s Global Assembly Line

  3. 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”

  4. Commodity Chains • Production contractors • Factories not owned by retailer • Foreign Direct Investment (FDI)

  5. 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.

  6. Global FDI trends

  7. 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”

  8. Global Growth in Export Processing Zones (2001)

  9. 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.

  10. The Cost of a Shoe

  11. Labor costs of a $100 shoe • 40 cents

  12. Globe-trotting Nike: “downward leveling” • Early 1960s - Oregon • 1967 – Japan • 1972 - S. Korea and Taiwan • 1986 – Indonesia, ChinaandThailand • 1994 – Vietnam • 2000-China

  13. 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

  14. How global are MNC’s?

  15. 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

  16. Economic success stories • NICS: Newly Industrialized Countries • “Asian Tigers” • Singapore • Hong Kong • Taiwan • South Korea • Malaysia • Thailand • Korea video

  17. 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

  18. 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

  19. 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?

  20. 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?

  21. Alternative Perspectives • The Hyperglobalist Perspective • The Skeptical Perspective • The Transformationalist Perspective

  22. 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”

  23. Hyperglobalist Thesis • Both supporters and critics are in agreement that globalization is the driving phenomenon in the world today

  24. 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

  25. 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

  26. 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

  27. 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

  28. 61% MFG - 77% EXPORTS

  29. 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

  30. 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