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Title:  Global Shift, 6th Edition

Author:  Peter Dicken (British) (Academic at University of Manchester 1866-present)

- MA from University in Manchester; Currently Professor Emeritus at same institution

- Specializes in globalization and transnational corporations

- Co-director of European Science Foundation

- Awarded the Victoria Medal by the Royal Geographical Society in 2001

- Awarded the Centenary Medal by the Royal Scottish Geographical Society in 2007

Publisher:  The Guilford Press, 2011

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Summary:   The political structure must exist to provide stability for an economic structure—states are the most important component of the global political economy.  Globalization is a “multidimensional syndrome of processes” that engages multiple actors in cooperative and competitive asymmetrical power relationships.  Global production networks bind Transnational Corporations, States, the Labor Force, and Consumers together from extraction or resources to consumption of finished products.  Relationships among GPN participants may be cooperative and competitive based on the industry. Success of the “core” states contrasts with the “periphery” states that continue to fall further behind. 

Thesis:  Globalization is a dramatically regional trend, concentrating growth in the Northern Hemisphere, while underdeveloped states in the Southern Hemisphere continue to fall further behind—poor governance, lack of infrastructure, a poorly educated work force will continue to prevent the advancement of the poorest regions without significant and conscious efforts by developed nations.

Main Points:

Globalization:  “a multidimensional syndrome of processes grounded in, and helping to create, specific geographies, involving multiple actors engaged in processes of both conflict and collaboration, and connected through asymmetrical power relationships.” (530)

- Introduces 2 new factors:  Increased Volatility & Growing Interconnectedness (16)

- Hyper-globalists:  Nations are no longer relevant—borderless world—global is the new natural order (4)

- Right:  Neo-liberals (pro-globalization)—cure for all ills; rising tides raise all ships (5)

- Left (anti-globalization):  globalization is problem, not solution (5)

Shifting Contours: (Chapter 2)

- More and more production is being traded across national boundaries—increased interdependence (18)

- Foreign Direct Investment has surpassed trade as #1 mechanism of interconnectedness (20)

- Trade imbalances among nations creates instability

- The US currently has an “enormous” trade deficit (27)

- Rise in Asia characterized by:  (1) rise of China after WWII (2) rapid growth among ‘four tigers’ (3) emergence of China (4) emergence of India (30)

- US is a net importer of finished merchandise and a net exporter of agriculture and services (39-41)

- Cities have become ‘world cities’ economically, because their function transcends national borders (44)

Processes of the Shift: (Chapter 3 & 5)

- 3 layered analytical framework:  (Top) Macro-structures—institutions, conventions (Middle) Circuits and networks of interaction (Bottom) Geographical distribution of resources (53)

- Global Production Networks (GPN):   (57)

- Circuit of interconnected functions, operations, and transactions through which a specific commodity, good or service is produced, distributed and consumed—simultaneously an economic and political phenomena (56, 59)

- Cycle of Inputs, Transformation, Distribution, Consumption—influenced by Transnational Corporations (TNC), States, Consumers, Labor, Civil Society Organizations (60)

- TNCs play the key role (60)

- Physical locations of GPN nodes expose them to geographical contexts (62)

- TNCs:

- Size is no longer a factor that determines the degree to which a firm is engaged across national borders (120)

- Subsidiaries are networks of networks that operate across TNC organizational charts (121)

- Corporate HQ is locust of decision making (134)—almost always remains within the nation state of origination (136)

- Outsourcing:  moving production abroad is the dominant trend, but TNCs are beginning to put investments in functions closer to home to simplify supply structures. (144)

- Alliances among firms are increasing (155)

Technological Change (Chapter 4)

- A fundamental force in shaping the patterns of economic transformation (76)

- Technological diffusion can stimulate growth where the contextual elements are appropriate (75)

- Advancements in Transportation and Communication technologies shrink the bounds of time and space. (81)

- Geographical unevenness of communications infrastructure (digital divide) is a major global economic problem—restricts the potential role of lesser developed regions (95)

The State (Chapter 6 & 7)

- The most significant force in shaping the world economy (171)

- 4 types of Capitalist Markets (177)

- Neo-liberal market:  US, UK

- Social-market:  Germany

- Developmental:  Japan, South Korea

- Authoritarian:  China, Russia

- Fiscal policy:  sets tax rates on businesses and individuals (179)

- Monetary policy:  influences size of money supply (179)

- States cooperate and compete with each other for dominant economic positions (203)

- Relationship with TNCs:  Dialectic (222)

- They need each other to thrive (223)

- States set barriers and inducements to stifle or attract TNC actions (225)

Extractive Industries (Chapter 8):

- Combination of “finite quantities, fixed locations, and territorial embededdness creates the specific shape and developmental path of the extractive industries.” (244)

- Nature of extraction industries: (246)

- Large Firms; Capital and Technology intensive—high sunk costs (255)

- Markets very sensitive to economic changes (251)

- Labor intensity is low (253)

- 3 challenges faced: (253)

- Finding new sources of supply

- Extracting highest yield from available sources

- Getting extracted resources to market

- State involvement highest of any industry (255)

- Nationalization of resources places public businesses in direct competition with privately operated business (258)

- Brings public and private business into direct competition on uneven field

Agricultural Industries (Chapter 9):

- Food security a major concern for states—states are maintaining/developing latent capacity to guarantee their ability to feed governed population in case of global shortages

- Subsidies retain land for potential farming demand domestically, and land is being purchased aboard (South Korean purchases in Africa) to retain growing capability abroad

- State food security challenged by centralized food growers/distributors—recent trend (296)

- Brings TNCs in direct competition with state interests (same as extractive industries)

- Food distribution to the southern hemisphere is a problem not actual food growth capacity

Fashion Industries (Chapter 10):

- Labor intensive—outsourced to regions where labor can be obtained at a lower cost to the TNC

- Highly fragmented industry, though trend has been to consolidate production, distribution and marketing

- TNCs move operations to circumvent strict labor rules imposed by the governing institution—Multi-Fibre Arrangement

Automobile Industry (Chapter 11):

- The primary industry for several states—protection by state governments

- The foundation for countless secondary and tertiary industries

- A highly interconnected and resource dependent industry

- TNC operations spread across numerous states—each state has an interest in TNC success

Finance Industries (Chapter 12):

- Money makes the world go round

- Advanced business services built on information and knowledge

- Trend of international deregulation allowed banks to diversify into several financial industries—allowing each to create an expansive market by doing business with itself

- 2008 crash put a halt to deregulation and may begin to shift the trend in the opposite direction

- The 6 largest global banks reside in the US and UK (Top 3 are US banks)

Logistics (Chapter 13):

- Introduced time as a dominant component  to business

- Just-in-time resourcing a central driver of business structure and relationships

- The primary air and sea shipping hubs are located in the northern hemisphere

- Logistics is the globalizing component of globalization

Net Benefit and/or Costs for local economies related to GPNs (Chapter 14)

- Direct and Indirect Effects

- Hiring:  GPN components hire locals directly to work processes—typically lower end production jobs in developing nations, though trends are beginning to show managerial hiring as well—quality versus quantity of jobs is important (439, 441)

- Indirectly, local businesses hire more employees to provide increased resources or services for the TCN. (436)

- Job creation = #1 Issue for local economies (440)

- TCNs pay higher wages than local businesses (benefit to local economy) but less than they would have to pay in a developed nation (benefit for TCN) (443)

- Technological Diffusion:  The TCN may need to provide new technologies to local economies to accesses resources needed for operations, but often times TCNs provide the output of new technologies without actually divulging the technology itself (439)

- Local economies operate at a disadvantage when negotiating with TCNs who enjoy the leverage of other global opportunities—they run the risk of being dominated by the TCN (448, 450)

Relationship between Climate Degradation and Economic Production (Chapter 15)

- 3 ways economic growth has negatively impacted the environment (456)

- Over-use of non-renewable and renewable resources

- Over-burdening of natural environment

- Destruction of increasing numbers of ecosystems—creating space for urban and industrial development

- The poorest nations in the world, already on the losing end of globalization, are the ones most negatively affected by the tradeoff between environment and economic growth (467)

Contours of Global Inequality (Chapter 16)

- Global contours show “staggeringly high peaks of affluence and deep troughs of deprivation.” (476)

- Globalization has brought increasing global inequality and vulnerability (478)

- Top 20% of population has 80% of global income; bottom 20% has 1% (478)

- Lower income nations have lower life expectancy and lower literacy rates (481)

- Unemployment in developing nations is far worse than in developed nations (493)

- Developed nations have become ‘deindustrialized’, hollowing out inner city employment historically tied to industrial production (494-5)

- Developed nations now focused on Services industry (494)

- Within countries income disparity can be high as well (484)

- Developed countries:  disparity in US worse than all other developed nations—worsened since the 1960s (484)—wealth tends to be highly concentrated (488)

- Developing countries:  mixed results—some better and others worse than US (489)

- Employment shifting from agriculture to industry and services (505)

- Labor rate has doubled every 30 years—3 times faster than Europe in the 19th century (506)

- High poverty due to an overdependence on a narrow economic base—unskilled labor and exploitation of natural resources (508)

- Winners/Losers:

- Winners: Transnational Capitalist Class—individuals concentrated in developed nations—connected with international means of economic growth. (491)

- Losers:  Women, particularly in the poorest nations (492)

- Global trade favors the more developed nations due to a growth in demand of services and finished goods (510)

- Resource curse:  abundant resources in the less developed nations does not guarantee rapid economic growth—low yield, low skilled extraction/export of resources crowds out the potential for higher paying/higher skilled employment (510-1)

- Population Trends

- Developed nations are getting older and decreasing in size; developing nations remain young and are exploding in population size (511-3)

- Causing over-urbanization in developing countries where cities can’t support population growth—higher crime, poverty and unemployment (514)

- Out migration (emigration):  positive—reduces stress on saturated labor pool; negative—most talented and involved are mainly those departing (517)

Way Forward (Chapter 17):  based on a better understanding of the world and a sense of ethical/moral vision (525)

- 3 main issues dominate future considerations (527-8)

- US shift to pre-emptive action following 9/11

- Political developments in East Asia

- Failed, dysfunctional or inadequate states

- Globalization proponents:  brutal process, but the winners significantly outnumber the losers (528)

- Globalization opponents:  lobby for either a world government or isolation—self-sufficient local communities that minimize international trade (529)

- Interest groups and international institutions attempt to enforce corporate codes of conduct, but there is no legal mechanism to enforce compliance—strictly voluntary (534-6)

- Attempts have been made and are ongoing to regulate global financial markets (IMF, World Bank, G20), global trade (GATT and WTO) and the environment (538)

- Purpose of IMF and World Bank (Brenton Woods agreement, 1944) was to “stabilize and regulate international financial transactions between nations”—has actually hurt developing nations because of the stringent requirements imposed to borrow money from the institutions. (539-40)

- GATT and WTO impose a “ruled oriented” approach to multilateral trade (544)

- The WTO continues to experience issues abroad with labor standards and the environment (545)

- The Future:  Author advances the idea that openness is the future, but it must be based on a level playing field (554)

- Dilemma of Balance:  To resist economic growth risks social collapse, but continued growth at all costs (economic disparity, environmental destruction) is not a long-term solution (556)

- Chooses moral argument over practical argument (558)

- “The opportunity must be taken to build a new system to redress the imbalance that has developed between states and markets.” (559)

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