L10 - linking consumption and production: commodity chains and production networks

Question 1

Disintegration of production

Answer 1

• Vertical integration (hierarchy)
• External networks
  o Markets (e.g. apple do not do any production of their products, earn all their money in marketing)
  o Subcontracting
  o Strategic alliances/joint ventures
  o Franchising/licensing
• Every commodity chain/production network constitutes a unique constellation of activities performed via complex combinations of internal and external network connections
• 1970s firms started to outsource and offshore

Question 2

GCCs - analytical elements

Answer 2

• inter-organisational networks, clustered around one commodity
  link households, enterprises and states
• situationally specific, socially constructed, and locally integrated
• involve the acquisition and/or organization of inputs, labour power, transportation, distribution and consumption

Question 3

GCCs - main dimensions

Answer 3

• Input-Output Structure
• Geography or Territoriality
• Governance Structure
• Institutional Framework

Question 4

Evolving geographies of GCCs

Answer 4

• Increasingly organised at the global scale (cf. globalization as process)
• But other spatial scales still important, especially macro-regional
• Increasingly geographically complex – enabled by a range of transport, communication and process technologies
• Increasingly dynamic and liable to ‘spatial switching’, due to both technological and organisational processes
• Constituted by combinations of long-distance connections and clusters

Question 5

Coffee vs laptops

COFFEE

Answer 5

• Coffee is tropical product, produced south of equator
• Consumption is concentrated in the global north
• China = rising middle class and westernisation, likely that coffee consumption is increasing here

Question 6

Coffee vs laptops

LAPTOPS

Answer 6

• Yangtze delta, China
• Highly concentrated area
• Lots of investment comes from Taiwan
• Highly networked across space globally

Question 7

Producer and buyer-driven production systems

Answer 7

• Geographies of networks determined by buyers = refers to retailers who buy from manufacturers
  Power for key actors
• Coffee produced by huge number of producers in the global south (around 25 million)
• But only 4 large global traders = control 40% of international trading markets (concentration of power)
• Consumption = only small number of roasters = control almost 50% of roasting in the world (they are in the position to extract the most value)
• Moves along production chains to where it is sold = 30 grocers who will sell to 500 million consumers

Question 8

The upgrading debate

Answer 8

• Process upgrading: e.g. from assembling components to assembling whole computers (OEA to OEM)
• Product upgrading: e.g. adding design capacity to assembly operations (OEM to ODM)
• Functional upgrading: e.g. moving into selling products under own brand (ODM to OBM)
• Chain upgrading: e.g. moving from TVs to computer monitors, or laptops to wireless phones
• Policy interventions often seek to facilitate these processes

Question 9

Institutional contexts of commodity chains

SPATIAL SCALE

Answer 9

• Global scale: WTO, IMF etc.
• Macro-regional scale: EU, NAFTA, ASEAN etc.
• National scale: wide variety of national government policies and regulations
• Local/regional scale: activities of local governments

Question 10

Institutional contexts of commodity chains

FORMAL VS. INFORMAL

Answer 10

• Formal – the rules and regulations that determine how economic activity is undertaken in particular places (e.g. tax policy, environmental regulations etc.)
• Informal – less tangible, place-specific ways of doing business that relate to social, economic and political cultures of places

Question 11

Tea in S. India

Answer 11

• many institutional actors involved = not linear

- highly complex in terms of institutional governing

Question 12

GPNs

Answer 12

Henderson et al, 2002
- nexus of interconnected functions and operations through which G&S are produced, distributed and consumed (increasingly complex and global)
- GPN aims to = ‘understand the social and developmental dynamics of contemporary
capitalism at the global-local nexus.’ (Bair 2005)

Question 13

How is GPN approach distinctive?

Answer 13

• Explicitly considers extra-firm networks, bringing into view the broad range of non-firm organizations – e.g. government agencies, trade unions, NGOs, and consumer groups – that shape GPNs
• Is innately multi-scalar, and considers the interactions and mutual constitution of all spatial scales from the local to the global
• The governance characteristics of GPNs are taken to be much more complex, contingent, and variable over time than is suggested in GCC/GVC analysis