The Globalization of Production

1
The Globalization of Production

• The Multinational Corporation

2
Globalization of Production

• Interested in structures of production
• (How) are they dispersed?
• Where are they located?
• Why are they located where they are?
• What is the relationship between multiple
  production centres?
• Who are the principal agents?

3
Globalization of Production

• At least partly a function of investment
• FDI - Investment made outside of the investors
  home country control over resources stays with
  investor
• Portfolio investment Investment made outside of
  the home country control transfers to seller

4
Globalization of Production

• FDI is our focus in these discussions
• Its increase is why we talk about the
  globalization of production
• Were also interested in the direction of its
  flow and its reach from US outward later
  outward from EU and Japan

5
Globalization of Production

• Why has FDI increased?
• What are the negative and positive consequences?
• Hard to make a general statement varies from
  case to case

6
Globalization of Production

• Technological factors
• Regulatory changes
• Political factors
• Changing Organizational principles

7
Changing Organizational Principles

• Vertical Integration
• Post-Fordism
• Export Processing Zones
• Offshore operations
• Outsourcing

8
Gereffi ArticleGlobal Commodity Chains

• The capacity to produce and export manufactured
  goods is being dispersed to an ever-expanding
  network of developing and developed countries

9
Gereffi ArticleGlobal Commodity Chains

• The production of a single commodity often spans
  many countries
• Comparative advantage lies not in the production
  of a product, but in the production of a component

10
Gereffi ArticleGlobal Commodity Chains

• The stages of production have been disaggregated
  under the organization structure of densely
  networked firms
• Commodity chain a network of labour and
  production processes whose end result is a
  commodity

11
Gereffi ArticleGlobal Commodity Chains

• Interested in the length of the chain its
  density
• Gereffi observes that activities that used to be
  internal to a firm are now external
• A production process is not synonymous with a
  firm it goes beyond the firms structure
• production process is a network of firms

12
Gereffi ArticleGlobal Commodity Chains

• Buyer-driven commodity chains
• Large retailers, brand-name merchandisers and
  trading companies shape decentralized production
  networks in the periphery
• TNCs are not actually manufacturers they manage
  production networks
• Labour-intensive, consumer goods Nike, Reebok

13
Gereffi ArticleGlobal Commodity Chains

• Producer-driven commodity chains
• Transnational corporations coordinate production
  networks capital- and tech-intensive (autos,
  aircraft)
• Control exercised by administrative headquarters
  of TNCs

14
Gereffi ArticleGlobal Commodity Chains

• Triangle Manufacturing
• U.S. Manufacturers source to NICs
• NICs source to Indonesia, China, Vietnam
• Finished goods shipped back to buyer in U.S.
• NIC manufacturers as middlemen

15
Gereffi ArticleGlobal Commodity Chains

• Why do some enterprises develop in the way they
  do?
• How are they different from other sectors? From
  sectors in other places? From other historical
  periods?
• Example of the Apparel Industry
• Producers of standardized clothing versus high
  fashion