The Global Assembly Line Volkswagen’s Global Assembly Line What is the “Global Assembly Line?” • Multinational or transnational corporations (MNCs or TNCs) • “Economic globalization” • Enabled by modern.

Report
The Global Assembly
Line
Volkswagen’s Global
Assembly Line
What is the
“Global Assembly Line?”
• Multinational or transnational
corporations (MNCs or TNCs)
• “Economic globalization”
• Enabled by modern ICTs
– “just in time production”
– Back offices in foreign countries
• “Export Processing Zones”
• Multiple locations
– “Global Assembly Line”
Commodity Chains
• Production contractors
– Factories not owned by retailer
• Foreign Direct Investment (FDI)
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.
• Done mostly by companies (as
opposed to financial institutions,
which prefer indirect investment
abroad such as buying shares of
stock or public bonds.
Global
FDI
trends
FDI and trade
• Complementary with trade
– Factory can serve surrounding
region
– Services need to be located abroad
• Alternative to trade:
– Avoid barriers to trade
– “Transfer pricing”
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)
Africa (47)
Turkey (11) Philippines (35)
Indonesia (26) Jordan (7)
China (124)
Kenya (14) Egypt (6)
Oceania (2)
Fiji (1)
Total (633)
Basic Premise:
Difference in Wage Rates
Average wages of workers who
made Suburbans in the late 1990’s
U.S.
$18.96/hr.
Mexico $1.54/hr.
The Cost of a Shoe
Labor costs of a $100
shoe
• 40 cents
Globe-trotting Nike:
“downward leveling”
•
•
•
•
Early 1960s - Oregon
1967 – Japan
1972 - S. Korea and Taiwan
1986 – Indonesia, China and
Thailand
• 1994 – Vietnam
• 2000-China
Industrial relocation
decisions:
non-labor factors
• Government 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
How
global
are
MNC’s?
Global Production: Social
Issues
•
•
•
•
Health and Safety of Workers
Coercive Working Conditions
Anti Union Environment
Government Involvement in Coercion
and Lack of Participation/Democracy
in Decision making
• Child Labor
http://www.ilo.org/public/english/stan
dards/decl/intro/ilo_movie/index.htm
Economic success stories
• NICS: Newly Industrialized Countries
• “Asian Tigers”
–
–
–
–
–
–
Singapore
Hong Kong
Taiwan
South Korea
Malaysia
Thailand
• Korea video
Korea: Creation of New
Comparative Advantage
• “Developmentalist
state”/sometimes authoritarian
• Strategy
– Major land reform in the rural areas
– Started with Import Substitution
Industrialization (ISI)
– Moved to Export Oriented
Industrialization (EOI)
– Numerous subsidies for EOI
industrialization
Korea: Creation of New
Comparative Advantage
• Cultural 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)
• More recently: democratic reforms
The Globalization Debate:
key questions
• What is globalization?/ How should it be
conceptualized?
• Is it really that new?
• How does contemporary globalization
change politics?
– state power?
– other scales of power and sovereignty
• How can globalization be democratized?
• Where is global change going?
The Globalization Debate
• Agreement on changes in
interconnectedness
• 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?
Alternative Perspectives
• The Hyperglobalist Perspective
• The Skeptical Perspective
• The Transformationalist
Perspective
Hyperglobalist Thesis
• A Global Age: McDonaldization
– New Unprecedented Era in which global
interconnectivity will dominate political
relations
• It’s about the economy, stupid!
– Global capitalism/International division of
labor
• Reduction of State Sovereignty
– “Borderless World” (Ken Ohmae)
– “Hollowing out of the State”
Hyperglobalist Thesis
• Both supporters and critics are
in agreement that globalization
is the driving phenomenon in the
world today
Hyperglobalist Boosters
• Problems, 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
Hyperglobalist Critics
• Critics: Globalization creates uneven
development; need to consider social
and political aspects of development
too.
– Increasing inequalities
• inside countries
• internationally
– Increasing homogeneity of culture
– Monopolization of public space by
private interests
– Reduction in the democratic process
The Skeptics Thesis
• Globalization 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 countries
The Skeptics Thesis
• State is still a player: “National
Interest”
• Regionalization 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
61% MFG - 77% EXPORTS
Transformationalist
Thesis
• New architecture of world order
• New patterns of stratification among
political actors
– State, NGOs, Civil Society,
Transnational and Global
Governance
• No clear end point: open ended, non
teleological
• New opportunities
• State becomes a catalyzer
Doreen Massey:
Globalization Skeptic
• Professor of Geography at Open
University, London
• Theorization of Space and Place
constructed through networks of
power
• Hettner Lecture: “Imagining Globalization”
• http://www.uniheidelberg.de/media/geographie/Hettner199
8.html

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