Global Shift (Chapters 1-3) PDF

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Chapters 1, 2, and 3 introduce the concept of globalization and the main players in the global economy....

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Global Shift by Peter Dicken Chapter 1: What in the world is going on? Globalization is a concept whose roots go back to the 19th century. However, the term itself is commonly misused and confusing. The hyperglobalists argue that we live in a flat, borderless world where the geographical and national spectrums are irrelevant, and global corporations are the natural order. Pro-globalists (Neo Liberals)  They feel that globalization is the solution to all of the world’s problems.  They feel that if we let free markets rule, then our world would be in better shape, and human material well-being would be enhanced.  Problem with this view: this involves too little globalization instead of too much. Anti-globalists (Left wing)  Relying on globalization is a terrible idea.  They feel that free markets create inequality, and the globalization of those markets would increase the scale and extent of inequality and cause environmental problems.  Markets would only work if they were regulated in the wider interest. Shallow Integration- vague, superficial connectivity between countries and independent firms in terms of arm’s length trade and simple direct investment Deep Integration- Complex connectivity between nations and firms in terms of trade, investment, geography, and other various factors Globalization myths 1. The world is not flat: Dicken claims that geography still matters in terms of economics, and that some people and places have advantages and disadvantages based on where they are. 2. The world is not borderless: Political entities still have more power when it comes to shaping the global economy. 3. Global Corporations do not rule the world: States have more power and TNCs (Transnational corporations) have less power than other people claim 4. Globalization is neutral(not always good, not always bad)

Chapter 2: The Centre of Gravity Shifts: Transforming the Geographies of the global economy The global division of labor developed and intensified with industrialization. The USA, UK, and a few countries in Western Europe used a core-periphery system. However, the system became more complex and fragmented by the Second World War. The global economy since 1950 has been characterized by the increased volatility of aggregate economic growth and increasing interconnectedness.  Trade has grown faster than output  Foreign direct investment has grown faster than trade

Structural imbalances in the world economy have emerged: Countries have huge trade surpluses and enormous deficits Foreign direct investment- direct investment between national firms to gain a degree of control over a firm’s operations. 

Global shifts and geographical advantages/disadvantages in various countries Over the last few decades, there have been geographical and economic shifts between countries. The geographical features for some countries/continents affect their overall force in the global economy. Western countries (particularly the United States)  The USA still dominates the global economy, but less than in the past.  The country has an enormous trade deficit due to weaker growth rates in modern times along with financial instability and uneven performance  Has become more important as an FDI destination  Geographic edge: The East and West have access to the oceans and have plenty of harbors with shorter distances to more locations like Europe Europe  Europe is closer to other areas, and is surrounded more by coast(especially Britain) than land mass  An extremely diverse economy  After the 2008 recession, severe contraction occurred within the European Union creating wide economic divergences between member states of the European Union Russia  The collapse of the Soviet Union caused Russia and Eastern Europe to develop transnational economies (capitalist market system).  It was dependent on oil and lacked a diversified economy after the capitalist shift, and there was less coordination due to its humongous land mass. Russia’s cold temperatures surround the country with ice, giving the people less access to oceans and harsher conditions living in some areas. Asia China  Experienced a reemergence 1980-2003 o Chinas growth rate was the highest in the world (+10%) o Slowed during 2008 financial crisis  But while most of the world was in decline they were still +9% growth  Largest manufacturing economy, merchandise exports  Largest driver of economic growth in Asia; China’s economy is growing much faster than other asian countries (Korea, Hong Kong, Taiwan, Singapore) China has affected global economy in 3 main ways: 1. Its effect on the prices of commodities (Largest consumer of steel, aluminum, copper, zinc, nickel ~~ so price has gone up) 2. Its effect on the prices of manufactures, especially labor-intensive products 3. Its impact on capital flows (accumulates current account surpluses, and foreign currency reserves) Japan

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Economy experienced exceptional growth in ‘60s, Post war, large competitor in global market o Growth began to slow in the ‘80s, Japan kind of fell behind; suffered from “Bubble Economy” o Although growth has slowed, Japan is the second largest producer of commercial services, third largest manufacturing economy.

Latin America  Unfulfilled potential o One of the most resource rich in the world  But also one of the most under developed ( except maybe Mexico although its growth is uneven) Africa  Most of the Sub-Saharan region is filled with poverty and deprivation  Low manufacturing and service production  Some areas are showing an increase in growth rates like Ghana, Mozambique and Nigeria, but are dependent on exports and Chinese demand Chapter 3: Unravelling complexity in the global economy GPNs (Global production networks) are circuits of interconnected functions and multi-way processes where specific commodities, goods, or services are produced, distributed, or consumed. 4 Parts of GPN (flows of materials and services) Inputs (of materials and non-materials: technology, energy, service, logistical) → Transformation (of inputs into semi-finished/finished goods) → Distribution (of goods/services) → Consumption (of goods/services)

5 actors in the Global Economy: 1. TNCs 2. States 3. Labor 4. Consumers 5. (Global) Civil Society Organizations (CSOs - page 65) Since GPNs are contested fields, relative power is determined by:  Control over key assets like capital, technology, natural resources, labor skills and knowledge  The spatial and territorial range and flexibility of each of the actors

TNC’s - Transnational Corporations  Shape GPN’s o TNC’s choose where to invest o Can control and coordinate operations in more than one country and GPN even if they do not own them, and take advantage of geographic features  Take advantage of Geographic Flexibility

o Ex. move to US since animal testing in UK is banned  Arguably shows the decline of states power 

States DO have SOME power

o o o o 

Go back on deals Purchasing power Regulations How failure is seen

Civil Society/Population

o Some degree of labor is always needed  As a result corporations need to decide if population has skills required o Goods can be transported across borders/ PEOPLE CAN’T o Consumer are the ultimate deciders Economic Geography  Bridges humanities, arts, and science  How history and environmental effect e-con  Social systems not confined by distance  Geography informs economic processes Territorial Embeddedness  Knowledge you attain by living in a location o Ex. using names to judge age of pop. , or knowing language to advertise correctly o Dickon says this must to be successful  This helps prove his point that the world is not flat Transitional Economy  An economy transitioning from one economic system to another (ex. Germany post 1989, transition from communism to capitalism)...