Economic globalization involves the integration of markets for goods, services, and factors of production across national borders. It has increased the importance of international supply chains. ICTs like the internet have reduced the costs of coordinating activities globally, similar to past infrastructure innovations. National governments employ various coping strategies to deal with globalization, such as promoting inward investment, workforce skills development, and R&D spending.

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 the
end of 2011 = 2.2 billion

8. Broadband Penetration, June 2011

11. Other Ways of Thinking about
Globalization
 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.

12. 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.”

13. 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.

14. 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

15. 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.

16. 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.

17. 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)

18. The Developmental State vs. the Regulatory
State
Developmental Regulatory
Type of Elite, Insulated Transparent,
Bureaucracy Accountable
Support for New Extensive Limited
Industries
Use of State- Extensive Limited
Controlled Banks
Stance w/regard Tutellary Regulatory
to Private Firms

19. 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

20. 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

21. 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

22. 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

23. 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