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  • 1. April 10, 2012
  • 2. Defining Globalization Economic globalization is a “set of processes leading to the integration of economic activity in factor, intermediate, and final goods and services markets across geographical boundaries and the increased salience of cross-border value chains in international economic flows.” Source: Introduction to Aseem Prakash and Jeffrey Hart, eds., Globalization and Governance (Routledge:1999)
  • 3. Value Chain Concept invented by Michael Porter A value chain is more comprehensive than a supply chain because it extends backward to R&D and innovation and forward to commercialization Michael Porter Harvard Business School
  • 4. The Role of ICTs in Globalization Reduced time, cost, and effort to coordinate activities across great distances Similar to the impact of the introduction of new transportation and communications infrastructures in the past (telegraph, railroads, ocean shipping) BUT also continuing relevance of international regimes (e.g. WTO, World Bank, IMF, global monetary system)
  • 5. Estimated users at theend of 2011 = 2.2 billion
  • 6. Broadband Penetration, June 2011
  • 7. Other Ways of Thinking aboutGlobalization Deterritorialization, e.g. of  diasporic communities  MNCs Cultural Convergence  leading toward a universal “sameness” Globalization as a Myth or Fad See, for example, Arjun Appadurai, Modernity at Large.
  • 8. Appadurai’s Cultural Landscapes Ethnoscapes Mediascapes Technoscapes Finanscapes Ideoscapes “The suffix scape also allows us to point to the fluid, irregular shapes of these landscapes, shapes which characterize international capital as deeply as they do international clothing styles.”
  • 9. Diasporic Communities any people or ethnic population forced or induced to leave their traditional homelands, the dispersal of such people, and the ensuing developments in their culture examples: Jews, Cubans, Chinese, Pakistanis, Indians, etc.
  • 10. Examples of Globalized Culture Corporate logos Who Wants to be a Millionaire MTV World Music, e.g. Reggae or Ska Anime, Manga, Pokemon (J-pop) Disneyland, Disneyworld theme parks Action movies with little dialogue
  • 11. Will Territorial Based SystemsBecome Obsolete? No (short answer) Territorial-based systems may become less important relative to others but it is more likely that more complex relationships among governance systems at different levels of aggregation -- local, national, regional, etc. -- and nonterritorial governance systems will have to be established.
  • 12. Coping Strategies: NationalGovernments  Many coping strategies are still possible.  Downsizing the state is not always desirable (e.g. the case of the formerly centrally planned economies).  National governments are likely to play a role in reducing inequalities accentuated by globalization.
  • 13. Theoretical approaches: Neoclassical (industrial policy is bad and counterproductive) Regulatory State (regulation necessary for markets to work properly, but industrial policy is still bad) Developmental State (industrial policy is useful for catching up) Competition State (industrial policy has to take globalization into account)
  • 14. The Developmental State vs. the RegulatoryState Developmental RegulatoryType of Elite, Insulated Transparent,Bureaucracy AccountableSupport for New Extensive LimitedIndustriesUse of State- Extensive LimitedControlled BanksStance w/regard Tutellary Regulatoryto Private Firms
  • 15. Industrial Policies Includes a wide variety of policy instruments that are intended to advance the international competitiveness of “national champion” firms, such as:  Investment subsidies  Public R&D expenditures  Science parks and free trade zones  Export incentives
  • 16. The Impact of Globalization onNational Economic Strategies Greater volatility in global financial markets requires changes in financial market regulations in all countries To remain internationally competitive, firms have adopted global production strategies Even regulatory states have to compete for inflows of foreign direct investment Developmental states cannot succeed with pure national champion strategies
  • 17. Examples of Coping Strategies Promotion of inward FDI Raising the skills of the workers via education and training programs Scholarships and fellowships for college Increased spending on research and development (R&D) Regional development efforts
  • 18. Example of GM in China 2010 sales of 2.3 million vehicles in China World-class production facilities (joint venture with SAIC) Modified Buick as a chauffeur-driven luxury car Not competing with low-end national champions like Geely
  • 19. Example of LG LCD Production Joint venture with Philips Only major competitors globally are Samsung and Sharp Production facilities use best materials and tools from global suppliers (e.g. Corning and Canon) Have to worry about China