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April 10, 2012
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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)
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Value ChainConcept invented by Michael PorterA value chain is more comprehensive than a
supply chain because it extends backward to R&D and innovation and forward to commercialization
Michael PorterHarvard Business School
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The Role of ICTs in GlobalizationReduced time, cost, and effort to coordinate
activities across great distancesSimilar 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)
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Estimated users at the end of 2011 = 2.2 billion
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Broadband Penetration, June 2011
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Other Ways of Thinking about GlobalizationDeterritorialization, e.g. of
diasporic communitiesMNCs
Cultural Convergenceleading toward a universal “sameness”
Globalization as a Myth or Fad
See, for example, Arjun Appadurai, Modernity at Large.
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Appadurai’s Cultural LandscapesEthnoscapesMediascapesTechnoscapesFinanscapesIdeoscapes
“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.”
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Diasporic Communitiesany 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.
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Examples of Globalized CultureCorporate logosWho Wants to be a MillionaireMTVWorld Music, e.g. Reggae or SkaAnime, Manga, Pokemon (J-pop)Disneyland, Disneyworld theme parksAction movies with little dialogue
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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.
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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.
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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)
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The Developmental State vs. the Regulatory State
DevelopmentalDevelopmental RegulatoryRegulatory
Type of Type of BureaucracyBureaucracy
Elite, InsulatedElite, Insulated Transparent, Transparent, AccountableAccountable
Support for New Support for New IndustriesIndustries
ExtensiveExtensive LimitedLimited
Use of State-Use of State-Controlled BanksControlled Banks
ExtensiveExtensive LimitedLimited
Stance w/regard Stance w/regard to Private Firmsto Private Firms
TutellaryTutellary RegulatoryRegulatory
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Industrial PoliciesIncludes a wide variety of policy instruments
that are intended to advance the international competitiveness of “national champion” firms, such as:Investment subsidiesPublic R&D expendituresScience parks and free trade zonesExport incentives
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The Impact of Globalization on National Economic StrategiesGreater 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
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Examples of Coping StrategiesPromotion of inward FDIRaising the skills of the workers via
education and training programsScholarships and fellowships for collegeIncreased spending on research and
development (R&D)Regional development efforts
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Example of GM in China2010 sales of 2.3 million vehicles in ChinaWorld-class production facilities (joint
venture with SAIC)Modified Buick as a chauffeur-driven luxury
carNot competing with low-end national
champions like Geely
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Example of LG LCD ProductionJoint venture with PhilipsOnly major competitors globally
are Samsung and SharpProduction facilities use best
materials and tools from global suppliers (e.g. Corning and Canon)
Have to worry about China