1. Transnational Corporations and Global Commodity Chains
Lecturer 7

2. Objectives of Lecture
To assess the importance and nature of major multinational corporations operating in the contemporary global economy
To assess the insights and limitations of using GCC approach to analyze the contemporary global economy

3. ‘Global’ Firms
Critical Question to entire globalization debate and this course is are contemporary MNCs actually global firms or are they essentially national firms with units abroad
Two ways we can attempt to answer this question, through quantitative or qualitative analysis

4. Pre History of Global Firm
“East Indian Company”
International Financers, follow the ‘flag’
What (arguably) new about the current era development of integrated global manufactures

5. Quantitative analysis basically involve looking at growth of the global stock of FDI and levels of particular firms assets held abroad

6. Peter Dicken essential conducts of quantitative analyze of major MNCs and argues that they remain rooted in particular locations.
The essential piece of evidence for Dicken is that TNI ratio for 100 largest MNCs only 52.6

7. Actually Dicken’s own evidence is ambiguous also there is a argument that it is static.
In the 1980s global FDI stock grew at four times as the speed of global GDP. This expansion was modest, however, when compared to the increase in the global stock of FDI from $1950 to $8895 billion which took place between 1990 and 2004 while the world economy as whole grew by slightly under 3.5 percent per annum

8. Although… important point about China and India
Although… important point about China and India. China attracts over $50 billion FDI year but GDP $7262 billion

9. Basic qualitative analysis is important but it has its limitations.
There are a number of question which must be asked about global firms that cannot simply be answered through analysis of level of FDI
Franchising
Simple Quantitative Analyses tells us a little amount about how firms manage themselves or organize their international activities

10. Dicken’s argues that in terms of corporate governance, levels of R&D investment and strategies of expansion distinct national MNCs remain distinct

11. Sklair formulates a very different argument
On basis of Interviews with senior management of Fortune 500 firms he establishes the extent to which these firms perceive of their future success as being dependent on their capacity to internationalize

12. This does simply refer to increased overseas investments but how they perceive themselves and their management structures
Engage in global benchmarking

13. In sense both Dicken and Sklair may both be right but they are analyzing different things

14. Focus on Individual Firms inadequate in attempting to understanding contemporary transnational production systems
Nike, Wal-Mart subcontracting
Global Commodity Chains analysis provides useful tool

15. Commodity Chains Analyze
Originally rooted in World Systems Theory. As a alternative to analyze of national economies (v broad approach)
Follow a product from beginning to end
Wallerstein et al work on development of transnational commodity chains from beginning of C16th
Wallerstein claims are fairly modest

16. Gary Gereffi (most famous chain scholar) has greater ambition for GCC approach and sees very different starting point
Post-war development (Post Fordism and Harvey)
All chains have input-output structure, spatial spread and governance structure

17. Chains controlled by lead firms
Chains controlled by lead firms. Existence of buyer driven (clothing) and producer driven chains (chains). Buyer driven chains most important for development and most closely linked with Postfordism
States must seek to upgrade position of their firms within GCC
Chains influenced by external politics (different emphasis in different parts chains literature)

18. Advantages of GCC:
Allows us to study economic transactions as they land, prevents statecentricism
More sensitive to power than conventional business studies ideas about value chains
More ‘real’ than orthodox trade theory

19. Problems with GCC:
An unresolved dilemma about you understand the articulation into global economy as a whole
Policy relevance is highly questionable. World Systems theory fallacy of development. Also from micro to Marco level

20. Conclusions
Critical Issues that are is stake in these debates is to what extent is which autonomous national development and viability of basing economic strategy on FDI

21. Some areas evidence is highly ambiguous
Some areas evidence is highly ambiguous. For example, do we leave in world of global firms
Also developmental implications of FDI and global integration is some way limited and highly ambiguous
Nevertheless, direction of change appears clear

22. I think that whatever the weaknesses of the work on Commodity chains it is difficult to deny that approach has some explanatory value
Link CC work back to Harvey and Post-Fordism
Next week some biggest MNCs of them all the International Private Financial Institutions