Globalization Structures - Chapter 2 - PDF

Chapter 2 Structures of Globalization ECONOMIC GLOBALIZATION -is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders....

Chapter 2 Structures of Globalization ECONOMIC GLOBALIZATION -is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders.  According to Benczes (2014) from the previous definition one can surmise several interconnected dimensions of economic globalization, such as: (a) Globalization of trade of goods and services; (b) Globalization of financial and capital markets; (c) Globalization of technology and communication; and (d) Globalization of production “Globalization is nothing but a process making the world economy an organic system” - Szentes (2003) TRADE SURPLUSES AND DEFICITS TRADE SURPLUS - the amount by which the value of a country's exports exceeds the cost of its imports. (aka POSITIVE BALANCE OF TRADE) TRADE DEFICIT - the amount by which the cost of a country's imports exceeds the value of its exports. (aka NEGATIVE BALANCE OF TRADE) TRADE BALANCE = Total Value of Exports - Total Value of Imports ECONOMIC CHAINS AND NETWORKS Trade in goods and services are clearly central to the global economy. Much of that trade takes place in interconnected circuits of one kind or another Gereffi (2005, 2012, 2015) has outlined several of the most important economic chains and networks involved in global trade: Supply Chains International Production Networks Global Commodity Chains Global Value Chains. SUPPLY CHAINS This is a general label for value-adding activities in the production process. A supply chain begins with raw materials and follows the value-adding process through a variety of inputs and outputs, and ultimately to a finished product. INTERNATIONAL PRODUCTION NETWORKS This involves the networks of producers involved in the process of producing a finished product. Multinational corporations (MNCs) are playing a central role, as being the “flagships” in these networks. GLOBAL COMMODITY CHAINS (Gereffi and Korzeniewicz, 1994). This brings together the idea of value-adding chains and the global organization of industries. It also accords a central place to the growing importance of the sellers of global products. This includes buyer-driven chains such as Wal-Mart, which play an increasing role in determining what industries produce and how much they produce. GLOBAL VALUE CHAINS “These highlight the relative value of those economic activities that are required to bring a good or service from conception, through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use” (Gereffi, 2012). OUTSOURCING is the transfer of activities once performed by an entity to a business in exchange for money. The form of outsourcing most closely and importantly associated with globalization is offshore outsourcing, which involves sending work to companies in other countries CONSUMPTION is the transfer of activities once performed by an entity to a business in exchange for money. The form of outsourcing most closely and importantly associated with globalization is offshore outsourcing, which involves sending work to companies in other countries CONSUMER OBJECTS AND SERVICES Much of consumption revolves around shopping for and purchasing objects of all kinds, but in recent years an increasing amount of consumption has related to various services (legal, accounting, educational, etc.) There are global objects, such as the automobiles manufactured in the United States, Germany, Japan, and, increasingly, China. On the other, there are global services, such as those offered by accounting firms and package delivery services CONSUMERS Increasing numbers of people throughout the world are spending more and more time as consumers unlike before that most people are producers. Not only do more people now spend more time consuming, but they are increasingly more likely to define themselves by what they consume than by their roles as producers and workers CONSUMPTION PROCESSES Increasing numbers of people know what is expected of them as consumers; they generally know what to do in the consumption process wherever they happen to be in the world. This includes knowing how to work their way through a shopping mall, use a credit card, or make a purchase online. CONSUMPTION SITES American and Western- style consumption sites – shopping malls, fast food restaurants, clothing chains, discounters such as Wal-Mart, Disney like theme parks, Las Vegas-style casino hotels, websites – have spread throughout much of the world. THE MODERN WORLD-SYSTEM Wallerstein’s research on the modern world-system focused on the broad economic entity with a division of labor that is not circumscribed by political or cultural boundaries. The world-system is a largely self-contained system with a set of boundaries and a definable life span; that is, it does not last forever. It is composed internally of variety of social structures and member groups. It is also known as the modern capitalist world-economy. Worldwide Division of Labor and the Development of the Modern World-System CORE - These are the areas that dominate the capitalist world-economy and exploit the rest of the system (e.g., US and Japan). PERIPHERY - These are the areas that provide raw materials to the core and are heavily exploited (e.g., many countries in the African region). SEMI-PERIPHERY - A residual category that encompasses a set of regions somewhere between exploiting and the exploited (e.g., India). RACE TO THE BOTTOM AND UPGRADING A dominant idea in thinking about less developed economies from a global perspective is the so-called “race to the bottom.” UPGRADING IN THE LESS DEVELOPED WORLD The current global economic system is based, at least in part, on a race to the bottom among the less developed countries and their exploitation by the more developed ones. INDUSTRIAL UPGRADING: Is the movement of nation- states, firms, and even workers from low-value to relatively high-value production.