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Y376 International Political Economy, Lecture #20,

Y376 International Political Economy, Lecture #20,
April 14, 2011

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  • 1. April 14, 2011
  • 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. Other Ways of Thinking about Globalization
    • Deterritorialization , e.g. of
      • diasporic communities
      • MNCs
    • Cultural Convergence
      • leading toward a universal “sameness”
    • Mythology or Fad
    See, for example, Arjun Appadurai , Modernity at Large.
  • 5. 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.”
  • 6. 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.
  • 7. 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
  • 8. Will Territorial Based Systems Become 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.
  • 9. Coping Strategies: National Governments
    • 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.
  • 10. 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)
  • 11. The Developmental State vs. the Regulatory State Developmental Regulatory Type of Bureaucracy Elite, Insulated Transparent, Accountable Support for New Industries Extensive Limited Use of State-Controlled Banks Extensive Limited Stance w/regard to Private Firms Tutellary Regulatory
  • 12. 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
  • 13. The Impact of Globalization on National 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
  • 14. 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
  • 15. 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
  • 16. 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