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The Global Assembly Line. Volkswagen’s Global Assembly Line.

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Presentation on theme: "The Global Assembly Line. Volkswagen’s Global Assembly Line."— Presentation transcript:

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)Multinational or transnational corporations (MNCs or TNCs) “Economic globalization”“Economic globalization” Enabled by modern ICTsEnabled by modern ICTs –“just in time production” –Back offices in foreign countries “Export Processing Zones”“Export Processing Zones” Multiple locationsMultiple locations –“Global Assembly Line”

4 Commodity Chains Production contractorsProduction contractors –Factories not owned by retailer Foreign Direct Investment (FDI)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.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.Done mostly by companies (as opposed to financial institutions, which prefer indirect investment abroad such as buying shares of stock or public bonds.

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7 Global FDI trends

8 FDI and trade Complementary with tradeComplementary with trade –Factory can serve surrounding region –Services need to be located abroad Alternative to trade:Alternative to trade: –Avoid barriers to trade –“Transfer pricing”

9 Global Growth in Export Processing Zones (2001) Region (No. of EPZs) Key Countries (No. of EPZs) Latin America and the Caribbean (240)  Central America and Mexico (148)  Caribbean (51)  South America (41) Mexico (107) Honduras (15) Costa Rica (9) Dominican Republic (35) Colombia (11) Brazil (8) Europe and NIS (81) Slovenia (8) Bulgaria (8) Asia and Near East (264) Turkey (11) Philippines (35) Indonesia (26) Jordan (7) Indonesia (26) Jordan (7) China (124) China (124) Africa (47) Kenya (14) Egypt (6) Oceania (2) Fiji (1) Total (633)

10 Average wages of workers who made Suburbans in the late 1990’s U.S. $18.96/hr. Mexico $1.54/hr. Basic Premise: Difference in Wage Rates

11 The Cost of a Shoe

12 Labor costs of a $100 shoe 40 cents40 cents

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

14 Industrial relocation decisions: non-labor factors Government incentives and regulationsGovernment 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

15 How global are MNC’s?

16 Global Production: Social Issues Health and Safety of WorkersHealth and Safety of Workers Coercive Working ConditionsCoercive Working Conditions Anti Union EnvironmentAnti Union Environment Government Involvement in Coercion and Lack of Participation/Democracy in Decision makingGovernment Involvement in Coercion and Lack of Participation/Democracy in Decision making Child Labor dards/decl/intro/ilo_movie/index.htmChild Labor dards/decl/intro/ilo_movie/index.htm dards/decl/intro/ilo_movie/index.htm dards/decl/intro/ilo_movie/index.htm

17 Economic success stories NICS: Newly Industrialized CountriesNICS: Newly Industrialized Countries “Asian Tigers”“Asian Tigers” –Singapore –Hong Kong –Taiwan –South Korea –Malaysia –Thailand Korea videoKorea video

18 Korea: Creation of New Comparative Advantage “D evelopmentalist state”/sometimes authoritarian“D evelopmentalist state”/sometimes authoritarian StrategyStrategy –Major land reform in the rural areas –Started with Import Substitution Industrialization (ISI) –Moved to Export Oriented Industrialization (EOI) –Numerous subsidies for EOI industrialization

19 Korea: Creation of New Comparative Advantage Cultural and political strategiesCultural 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)High levels of US Foreign Aid (geopolitical motivations in region) More recently: democratic reformsMore recently: democratic reforms

20 What is globalization?/ How should it be conceptualized?What is globalization?/ How should it be conceptualized? Is it really that new?Is it really that new? How does contemporary globalization change politics?How does contemporary globalization change politics? –state power? –other scales of power and sovereignty How can globalization be democratized?How can globalization be democratized? Where is global change going?Where is global change going? The Globalization Debate: key questions

21 The Globalization Debate Agreement on changes in interconnectednessAgreement on changes in interconnectedness Disagreement on how to characterize the process and the power relations: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?

22 Alternative Perspectives The Hyperglobalist PerspectiveThe Hyperglobalist Perspective The Skeptical PerspectiveThe Skeptical Perspective The Transformationalist PerspectiveThe Transformationalist Perspective

23 Hyperglobalist Thesis A Global Age: McDonaldizationA Global Age: McDonaldization –New Unprecedented Era in which global interconnectivity will dominate political relations It’s about the economy, stupid!It’s about the economy, stupid! –Global capitalism/International division of labor Reduction of State SovereigntyReduction of State Sovereignty –“Borderless World” (Ken Ohmae) –“Hollowing out of the State”

24 Hyperglobalist Thesis Both supporters and critics are in agreement that globalization is the driving phenomenon in the world todayBoth supporters and critics are in agreement that globalization is the driving phenomenon in the world today

25 Hyperglobalist Boosters Problems, yes; but whole world will improve economically, politically and sociallyProblems, 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

26 Hyperglobalist Critics Critics: Globalization creates uneven development; need to consider social and political aspects of development too.Critics: Globalization creates uneven development; need to consider social and political aspects of development too. –Increasing inequalities inside countries inside countries internationallyinternationally –Increasing homogeneity of culture –Monopolization of public space by private interests –Reduction in the democratic process

27 The Skeptics Thesis Globalization is a myth or a discourseGlobalization 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 countriesIt’s a project of the West/powerful countries

28 The Skeptics Thesis State is still a player: “National Interest”State is still a player: “National Interest” Regionalization and FragmentationRegionalization 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

29 61% MFG - 77% EXPORTS

30 Transformationalist Thesis New architecture of world orderNew architecture of world order New patterns of stratification among political actorsNew patterns of stratification among political actors –State, NGOs, Civil Society, Transnational and Global Governance No clear end point: open ended, non teleologicalNo clear end point: open ended, non teleological New opportunitiesNew opportunities State becomes a catalyzerState becomes a catalyzer

31 Doreen Massey: Globalization Skeptic Professor of Geography at Open University, LondonProfessor of Geography at Open University, London Theorization of Space and Place constructed through networks of powerTheorization of Space and Place constructed through networks of power Hettner Lecture: “ Imagining Globalization ”Hettner Lecture: “ Imagining Globalization ” heidelberg.de/media/geographie/Hettner199 8.htmlhttp://www.uni- heidelberg.de/media/geographie/Hettner199 8.html


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