James R. Wilson
Competitive Territories in the Global Economy
Sessions 1 & 2
• Trade has taken place for many centuries
– Regional trade in the Roman empire, for example
– Marco Polo
– The search for sea routes between Europe and the East
– But not all ‘Euro-centric’: Chinese trading links?
• The commercialisation of trade
– Exploration and the development of modern financing
– The ‘India’ companies
– The significance of the industrial revolution
ORIGINS OF A GLOBAL ECONOMY …
• Transnational firm: One that controls and manages production
in at least two countries
• Embryonic transnational firms must have been found in the
ancient trading cultures of China, Europe, the Middle East, the
• But the modern transnational really emerged with the
– Initially, mostly European based (e.g. British American Tobacco, Lever
Brothers, Michelin, Nestlé)
– But, the ‘American Challenge’ from the 1950s
– And most recently, acknowledgement that TNCs can take different
forms (e.g. Japanese)
• Also rise of Indian, Chinese, Latin American, South African TNCs
EMERGENCE OF ‘TRANSNATIONAL FIRMS’
• Pre-WW2: Simple ‘core and periphery’ structure
– Core: Production of manufactured goods
– Periphery: Raw materials, foodstuffs, market for manufactures
– 71% of world manufacturing output in 4 countries, 90% in 11
– Core also absorbed 80% of periphery’s primary products
• This structure was shattered by WW2, which devastated the
– Post-1945 therefore a ‘new beginning’
– The US in a position to play a particularly dominant role …
– A new set of institutions set up at the Bretton Woods conference
• New divide: Capitalist West, communist East, plus ‘third
SHAPING THE ECONOMY POST-WW2
• Rapid growth in world production
– The world economy performed better in the last half century than at any
time in the past.
– World GDP increased six-fold from 1950 to 1998 with an average growth
of 3.9% a year, compared with 1.6% from 1820 to 195, and 0.3% from
1500 to 1820.
• But it is not a story of consistent, predictable growth …
– Post-WW2 ‘golden age’
– Recession in the 1970s
– Volatility in the 1980s and 1990s
– Renewed rapid world growth post-2000 ...
– Global recession from 2008, following financial crisis
• What is the current economic outlook?
RAPID GROWTH OF ECONOMIC ACTIVITY
• Trade has grown faster than production, however, signalling also
greater interconnectedness in the global economy
• This interconnectedness is reflected in other trends:
– Rapid increase in the quantity of foreign direct investment (FDI)
– Rapid growth in cross-border mergers and acquisitions
– Greater liberalisation of markets
– More globally dispersed value chains
• All of this has combined to make the current economic
downturn quite unique in its complexity ...
RAPID GROWTH OF ECONOMIC ACTIVITY
• What does the word ‘globalisation’ mean to you?
• There is general agreement that ‘something’ fundamental is
happening … the world has been, and continues to be,
undergoing profound changes in the way in which it is
• However, the nature of these changes is contested
– There is very little agreement on what, exactly, globalisation is, and on
what it implies …
… in spite of a deluge of publications on the subject, our analyses of
globalisation tend to remain conceptually inexact, empirically thin,
historically and culturally illiterate, normatively shallow and politically
naïve Scholte, 2000
WHAT IS GLOBALISATION?
• Globalisation has now been a buzzword for several years
– It was first used in a significant sense in 1983 by Theodore Levitt, to
refer to ‘the globalisation of markets’ …
– But it was not until the mid 1990s that we began to see the term used
more widely …
– And by the end of the 1990s there had been a dramatic ‘explosion’ in
the use of the word
• ‘Globalisation’ has passed into our language as a key word, and
today it is used as a ‘catch-all’ term to refer to a whole range of
– Usage of ‘Globalisation’ today … ?
The world’s needs and desires have been
BUT was he
WHAT IS GLOBALISATION?
• “But cheap flights, globalisation and the mounting cost of train travel have
made aviation by far the fastest growing source of carbon dioxide in the UK.”
– From an article in The Guardian on aviation emissions, January 2007.
• “… a backlash against globalisation and a desire to help local communities
had helped the rise of farmers' markets”
– From an article in The Times on politics and shopping, January 2007.
• “It is unclear whether workers will continue to accept declines in their real
living standards in the name of an unbalanced globalisation whose promised
seem ever more elusive. In America one can feel the backlash mounting.”
– From an article by Joseph Stiglitz in The Straits Times on world economic
prospects, January 2008.
A GENERALLY ACCEPTED STATE OF THE WORLD
• An Economist
– “a dynamic process of growing liberty and world integration in the markets
for labour, goods, services, technology and capital.” (De la Dehesa, 2000)
• A Sociologist
– “the compression of the world and the intensification of the consciousness
of the world as a whole.” (Waters, 2000)
• A Geographer
– “a reterritorialisation of both socioeconomic and political-institutional
spaces that unfolds simultaneously upon multiple, superimposed,
geographical scales.” (Brenner, 1999)
• A Politician
– “Nations act in their own self interest. But … our self-interest and our
mutual interests are today inextricably woven together. This is the politics
of globalisation.” (Tony Blair, 2nd October 2001)
CATEGORIES OF GLOBALISATION
• Last session we introduced the concept of globalisation
– Traced the evolution of a global economy from hundreds of years ago
– Analysed the emergence and evolution of transnational firms
– Looked at the key roles of the industrial revolution and WW2 in shaping a
– Saw the rapid growth of the global economy and of its
interconnectedness during the last 60 years
– Tried to define the term ‘globalisation’
– Showed that globalisation as a term has many facets and many meanings
• Today we will continue to explore the phenomenon of
globalisation as a key context in which individual territories seek
to be ‘competitive’
• ‘Globalisation’ cannot be confined to one discipline
– “globalisation has been a prominent topic among geographers and
sociologists as well as economists and political scientists, and is
studied within every paradigm…” (Radice, 2000)
• It is also characterised by “opposing tendencies”
– Homogenisation versus Differentiation
– Integration versus Fragmentation
– Globalisation ALONGSIDE Regionalisation … etc.
A COMPLEX, MULTI-FACETED PHENOMENON
• The hyperglobalists see globalisation as the new economic,
political, social, cultural order in which we live, where our lives
are dominated by global forces …
• Their view is essentially of a borderless world
– One where transnational firms dominate, and cultural differences are
seen simply as variations in consumer preferences
– “The nation state is just about through as an economic unit”
(Kindleberger, in 1969)
– More recently these views are associated with commentators such as
Ohmae, Friedman, Reich and Giddens
• This hyperglobalist view forms the basis for much of the debate
between the ‘neo-liberal right’ and the ‘anti-globalisation left’ …
But there is also an alternative perspective ...
A CONTESTED PHENOMENON: HYPERGLOBALISTS
• The sceptics argue that the nation state remains highly
significant, as we live in an international world
– Internationalism is built around nationalism (Bucharin, in 1918)
– So how ‘new’ is ‘globalisation’?
– What might be called “progressive nationalism” is associated with
commentators such as Hirst and Thompson, Ruigrok and van Tulder,
• Where do you stand in this debate?
– Is the world becoming borderless?
– Or will nation states remain important?
A CONTESTED PHENOMENON: GLOBALISATION SCEPTICS
• While the world economy has arguably been as ‘open’ at other
times in history, there is something qualitatively different about
– Deep integration has replaced shallow integration
– A new “turbocharged” era of globalisation (Friedman, 2000)
– This is impacting in different ways on the economic, political, social,
cultural and natural environments
• However, while such ‘globalising forces’ clearly exist, we have
not reached an ‘end-state’ in which local and national factors
cease to be significant
– Moreover, we can’t predict that we will reach this state, as globalisation
involves a complex set of intermittent, uneven processes that are
– Consider, for example, Dicken’s analysis …
MIDDLE GROUND … ?
• New, more integrated, global markets
• New global (and local) actors
• New rules and norms
1. Changing territory
2. Changing technologies
3. Spread of forms of market capitalism
Associated with these characteristics, we can identify
three key components to ‘globalisation’
SUMMARY: CHARACTERISTICS OF GLOBALISATION
• Scholte (2000) argues that globalisation is a new and distinctive
phenomenon only when seen in terms of ‘deterritorialisation’
– Social geography is no longer entirely territorial
– Territory still matters, but it no longer constitutes the whole of our
– While production used to be organised within national boundaries, for
example, this is no longer the case
• Space is shrinking, and borders are becoming less significant
1. CHANGING TERRITORY
• Changing spatial relations are intimately associated with
changes in transport, information, and communication
– Faster and cheaper air, sea, rail travel
– Cheaper and better phone connections
– Mobile phones
– Internet and other electronic communications
• These have facilitated emerging ‘global’ economic, social,
cultural and political relationships
2. CHANGING TECHNOLOGIES
• The process of ‘globalisation’ that we see around us cannot be
separated from the capitalist context in which it has emerged
– Liberalisation of markets
– Privatisation and the reduction of the role of governments
– The role of the IMF and World Bank in these processes
– The increasing significance of transnational corporations
– New ‘global’ division of labour and ‘global’ production chains
• The current form of globalisation is heavily influenced by this
– See Friedman (2000) and Stiglitz (2002)
– ‘Washington consensus’ globalisation (Sugden and Wilson, 2005)
3. SPREAD OF MARKET CAPITALISM
• It is a complex, multifaceted phenomenon, incorporating
changes in economic, political, cultural, social relationships
• In particular, globalisation refers to the changes in these
relationships as new technologies combine with the dominant
capitalist context in reducing the significance of territory
• As markets and production chains become ‘global’, there are
clearly economic, political, cultural and social implications for
different actors …
What are the implications of ‘globalisation’ for business?
SO WHAT IS GLOBALISATION?
• How fast is your company?
• Is your company harvesting its knowledge?
• How much does your company weigh?
• Does your company dare to be open on the outside?
• Does your company dare to be open on the inside?
• Does the management ‘get it’? And can you change the
management if they don’t ‘get it’?
• Is your company willing to shoot its wounded and suckle the
• How good is your company at making friends?
• How good is your company’s brand?
THOMAS FRIEDMAN’S NINE QUESTIONS
• Businesses need to recognise that increasingly they are
operating in global market places
– This presents both threats and opportunities
• Perhaps most crucially, businesses need to understand that
globalisation is inextricably linked with the creation and
communication of knowledge and information
– Success means staying one step ahead
• There is also a need to recognise and respond to some of the
‘opposing tendencies’ and be aware of ‘backlash’
– For example, regionalisation and localisation are important counter
forces to global markets
– This is a BIG factor in Europe, for example
• Global businesses able to respond to local markets?
• Local businesses able to project themselves globally?
SOME IMPLICATIONS FOR BUSINESS
• Many of the implications that we have identified for firms can
also be applied to societies more generally
– Freidman’s nine questions apply to countries as well as companies
– This is not surprising, given that societies are built around
institutions, including firms
– All institutions will be influenced by processes of globalisation
• There are economic, social, cultural, political implications for
countries and regions as the world becomes more deeply
– Again, threats and opportunities
• E.g. Car manufacturing industry in the West Midlands
• E.g. Paper industry in the Basque Country
• E.g. Ongoing attempts to postion the Basque Country as an innovation-
GLOBALISATION: IMPLICATIONS FOR SOCIETIES
• Some would say ‘yes’:
– Wealth spreading around the world through the globalisation of trade
• However, some would say ‘no’
– There is an ‘anti-globalisation movement’
• First coming to prominence in Seattle in 1999
– This ‘movement’ incorporates many diverse groups, with different
– But they are linked by a belief that ‘globalisation’ is threatening certain
things: culture, economy, environment etc.
• In many ways, this is an extension of concern with inequalities
and tensions created by capitalism …
IS GLOBALISATION WORKING?
• Given these concerns, and given your own concerns, do you
think there are alternatives to ‘globalisation’?
• Is ‘globalisation’ irreversible?
• Would it be desirable to reverse it in any case?
• It may be possible to reverse or stifle such trends by re-
implementing borders etc., and to some extent this may even
be starting to happen ... ?
• But my personal view is that this is not the way forward:
– The problems, and the frustrations, are not with ‘increasing and
deepening global relationships’ per se, but with the current forms of
• Tendency to widen divisions between ‘winners’ and ‘losers’
We must ask, therefore, if there are
alternative forms of globalisation?
IS GLOBALISATION WORKING?
• Current ‘Washington consensus’ globalisation might be
characterised as elite (Sugden and Wilson, 2005)
– It is structured around powerful transnational firms, where decision-
making is concentrated
– This is despite the language of freedom and democracy that are often
used when talking about ‘globalisation’ (e.g. Freidman)
If after sufficient terror, intimidation, destruction of popular
organisations and so on, you can ensure that power stays in the hands
of the right power groups, the ones linked up to US corporations and
banking institutions and the others who basically run this society, then
that is democracy and everybody is happy and we praise ourselves for
• Is it possible to alter current globalisation, so that it becomes
• This would imply fundamental concern with governance
– Governance of firms, networks of firms, governments, international
• With such a focus it is possible that many of the concerns of the
anti-globalisation ‘movement’ might be addressed:
– Is this movement really anti ‘globalisation’?
• Business cannot afford to ignore these concerns
– Reflected in increasing concern with ‘ethical business’, ‘corporate and
social responsibility’ and ‘good governance’
Economic globalisation is not some kind of immutable inevitability, but a set of
processes that is socially constructed, and therefore can be encouraged or resisted by
actors/institutions at various scales Coe and Yeung, 2001
• We have seen that globalisation is a complex phenomenon!
– It is multi-faceted and highly contested
– There is some middle ground however, which sees something
fundamental happening to the economic, social, political and cultural
relationships around which the world is organised
– These changes are influenced particularly by changing geography,
changing technology, and the capitalist context
– In turn there are implications for business, and for societies, around
– But questions remain as to how ‘globalisation’ can best be harnessed
as a positive force, how we can make it work better
– The real issue today, for both firms and societies, is finding some
solutions to these questions …
Next week we wil build on this context … We will explore what it means for
territories to be competitive in a globalised and globalising economy