Wealth Production Spaces: Diversity & Recomposition

• Spaces of production of wealth diversify worldwide based on location logics founded on competitiveness.
• Recomposition of productive spaces occurs globally and at state/regional levels.
• Increased flows favor certain spaces while disadvantaging others.

Diversity and Recomposition Criteria

• The growing diversity of production spaces raises questions about the criteria for their recomposition.

Hierarchy of Production Spaces

• Developed countries see their share in global wealth production declining.
• Since the end of the 1990s, their part in the world GDP decreased from 62% to 45.5% in 2013.
• China became the leading industrial power, surpassing the United States, in 2013.
• Emerging countries are taking an increasing place in global GDP, with BRICS now representing 25% (up from 7% in 1994).
• The geography of wealth production remains very unequal.
• The GDP of the United States, with 330 million inhabitants, is six times higher than that of the entire African continent.
• Wealth production is recomposing at all scales; Bangalore, India, grew from 778,000 inhabitants in 1950 to 8.5 million, becoming known as the "Indian Silicon Valley."

Production Space

• Production space is an area developed for wealth creation (mining, agriculture, industry, etc.) by various actors.

Emerging Country

• An emerging country experiences strong economic growth leading to development, increased participation in international exchanges, and a rising middle class.

BRICS

• BRICS is an acronym for Brazil, Russia, India, China, and South Africa.
• Jim O'Neill of Goldman Sachs designated them as attractive investment countries in 2003.
• These emerging countries hold annual summits to exert influence on the international stage.

New Production Spaces

• 83% of global manufacturing production occurs in 20 countries.
• The automotive industry was long dominated by developed countries, but China became the world's leading producer in 2009 due to its large domestic market.
• The geography of textile and clothing production shows ongoing recompositions.
• Concentrated in the United States and Western Europe until the 1970s, this activity shifted to North Africa and Asia in search of cheap labor.
• Asia is the leading global exporter, with China accounting for 37% of world exports in 2016.
• China's share is decreasing as new producers like Bangladesh, Vietnam, and Ethiopia emerge due to low labor costs and taxation.
• Production chains remain vertical, with Western clients relying on suppliers in low-cost countries.
• Chains can also be horizontal among highly qualified countries

Specialization of Productive Spaces

• Knowledge production remains concentrated in certain regions, with five countries accounting for 70% of R&D expenditure.
• The United States accounts for one-third of R&D spending.
• China has filed more patents than Japan or Germany since 2011.
• Technopoles around prestigious universities dominate high technology production.
• Financial service production dominates in global cities like Wall Street and the City of London.
• Southern cities such as Shanghai, Dubai, and São Paulo now account for 40% of global stock market capitalization.

Technopole

• A technopole is a park of activities that includes advanced activities such as leading-edge research, technology, and formation.

Productive Space Dynamics

• Geography of productive spaces evolves via rebalancing towards the South, diffusion to new spaces, and specialization of territories.

Value Chain Organization

• A New International Division of Labor (NIDL) led to territory specialization based on product families.
• Northern countries mainly produced high-value-added manufactured goods, while Southern countries supplied raw materials, and emerging countries focused on low-value and labor-intensive products, such as textiles and toys.
• Multinational corporations now practice the International Decomposition of Production Processes (IDPP).
• The iPhone is assembled in China from parts manufactured in at least eight different countries.
• Production spaces are geographically fragmented, with 30% of international trade involving exchanges within the same firm.
• Segmentation of value chains benefits from global mobility of people, capital, services, and goods.
• Fragmentation leads to deindustrialization in developed countries.

Value Chain

• A value chain is the set of operations undertaken by companies in producing a product, from design to commercialization.
• The organization in value chains is also referred to as international decomposition of production processes (IDPP).
• It is ensured by transnational firms and their subsidiaries.

Search for Maximum Competitiveness

• Companies outsource parts of their production to maximize competitiveness, especially lower-value activities like manufacturing.
• They often retain strategic, high-value activities like research, innovation, finance, marketing, and conception in their home countries.
• Some firms, like Intel and IBM, are also outsourcing research laboratories to India, China, and Southeast Asia.

Territorial Attractiveness

• Territories are not equally attractive depending on the value chains.
• Low labor costs, tax rates, and accessibility are key for manufacturing, access to a potential market, qualified workforce, research labs, attract companies involved in high-value activities.

Externalization

• Externalization is similar to sub-contracting, it involves a company transferring some of its activities to another business, either in the same country or overseas.

Climbing Value Chains

• Many Southern countries do not adequately exploit their productions.
• The chocolate industry is primarily based in developed countries, even though Côte d'Ivoire and Ghana are the world's top two cocoa producers.
• To increase the value of their production, they should industrialize, which risks unsustainable levels of debt.
• Small producers and exploiters are at the mercy of industrial groups of the North.
• Some Asian countries, like South Korea, have managed to climb industrial value chains by investing in products with low added value, acquire patents, and attract foreign firms.

Productive Space Dynamics

• Global Productive space is geographically broken down according to value chains, motivated by the firms' search for maximum competitiveness.
• Climbing value chains is a development driver for producing countries.
• Cacao value chain is an example.