1. Transnationalisation of Production and Consumption Flashcards
What is the definition of transnationalisation?
Heightened interconnectivity between people and the receding economic and social significance of boundaries among states
Michael Porter’s concept?
Industrial firms value chains 1980
What is a value chain?
An integrated set of value creating processes and activities leading to the supply of a product or service
Need to be coordinated and linked together by the management/technology
How best to do this to be most competitive
Where geographically
Who came up with value chains and what year?
Michael Porter 1980
What strategic decisions are made by the firm with regards to value chains?
Where to locate value adding activities
How to design them
What is the firms objective of value chains?
Cost minimisation or product differentiation
Why are strategic decisions made in value chains?
To determine where and how to gain competitive advantage
Why is a value chain constantly changing?
New products/processes
Competitors strategic decisions
5 Criticisms of Porter’s value chains
- Only one firm- limited understanding of global production and consumption
- Not sufficient in understanding the broader global economy
- Unconcerned with how value chains are embedded in the economy and society
- narrow focus on technicalities NOT on impact on society and economies or how they’re shaped by them - Doesn’t seek to understand firms relationships with other actors e.g gov, trade unions (crucial in no.3)
- Relationship with states under-theorised
1BESRAS
Who introduced the idea of commodity chains and when?
Gary Gereffi 1994
What did Gary Gereffit introduce and when?
Commodity chains 1994
Commodity chain definition
“Sets of inter-organisational networks clustered around one commodity or product, linking households, enterprises and states to one another within the world economy”
Why commodity chains?
“Big US Buyers have shaped production networks… in the worlds most dynamic exporting countries… of East Asia” Gereffi
Commodity chains interested in what about East Asia
The impact of big US firms on east Asia- do they benefit or disadvantage them?
How interacting and shaping the economy and society
How they take advantage of existing conditions in these countries
How they integrate themselves into another country
Commodity chain example of big US company
Nike 1970/ off-shored their production to factories in east Asia
Wanted cheap and efficient production
Why did companies offshore production to East Asia?
Labour was disorganised
- weak unions
Wanted Nike to help promote development and exports
Couldn’t say no to conditions
Networks in commodity chains are
Situationally specific
Socially constructed
Locally integrated
- this underscores the social embeddedness of economic organisation
Buyer driven commodity chains definition Gereffi 1994
in ‘Industries in which large retailers, brand-names merchandisers, and trading companies play the pivotal role in setting up centralised production networks in a variety of exporting countries, typically located in the 3rd world’
Buyer driven commodity chains
Industries with large retailers play a pivotal role in setting up decentralised production networks in a variety of exporting countries, typically 3rd world
E.g Nike
Why 3rd world?
Cheaper and less organised labour
Lends to labour intensive consumer goods industries
Buyers don’t own production facilities
They offshore and outsource them
Do design/specify
Buyers in East Asia give rise to particular patterns of coordinated trade
Set up from one place to another and how goods travel along this commodity chain
Producer driven commodity chain
Firms that dominate commodity chains in relation to high tech, high value industries e.g tech and cars 1980s/90s
Often secretive, firms carefully control info about products
Power in buyer driven commodity chains
Buyer has ability to connect/disconnect links between consumption and global manufacturing
Gain info about what consumer want
- info about demand gives power = RETAILER
Key control point = consumption
Buyer can pit suppliers against each other to get the best deal and push prices down
Creates high barriers to entry at level of brands and retailers
What do states do in buyer driven commodity chains?
Infrastructural investments
Transport links
Communication networks
Production privileges- low prices
Trade privileges- import of materials, quick exports
Finance- cheap/long term
Features of uneven development in DEVELOPING countries of buyer driven commodity chains
Concentration of production to low value sectors and spaces e.g garments and low end tech
Depend on overseas markets. Reduction in demand = fall in turnover
Protectionism = bad?
Features of uneven development in DEVELOPED countries
Impact on trade policy
Deflation - cheap goods outcompete manufacturing in America
e.g Steel industry
8 Criticisms of Gereffi
- Overly concerned with governance and power
- Buyer driven/producer driven distinction problematic
- Not concerned with historical impact on CC
- Not concerned with national and local differences
- Not focussed on strategy
- Doesn’t acknowledge significance of national ownership of firms
- Connotations of ‘chain’ = fixed, CCs are flexible and mobile
- Doesn’t consider key actors e.g. trade unions
DPOP HILDS NO CC KA
What is Neoliberalism?
Free market ideological doctrine prominent in 1980s
Neoliberalism Ideas
Push for freer markets and withdrawal of the states
Markets efficient at allocating capital
Argument against that markets are efficient at allocating capital?
Rich get richer
Poor get poorer
Henderson et al 2002
Global Production Networks
Features of Global Production Networks
More focus on consumption
More fluid than CCs
Networks constantly change and alter
Focus more on firms and roles of wider range of actors
Crucial role attributed to IT, info to suppliers
How places are transformed by flows of capital labour, knowledge, power etc.
Global Production Networks how value is being created
Power
Embeddedness
Value
Differential power relations between different regions
Criticisms of Henderson et al 2002 Global Production Networks
Not enough attention to institutions
Lose sight of impact of Neoliberalism
Need better understanding of changing dynamic of uneven devlopment
Two types of commodity chain
Buyer driven
Producer driven
What is a value chain
Integrated set of value creating processes and activities leading to the supply of a product or service
