Karteikarten
Global Value Chains
Karten in diesem Stapel (39)
- 1GVCs- GVCs
- Came into being under processes of globalisation
- MNCs rise
- How MNCs have sought to internationalise own econ activities - FDI, subcontracting, outsourcing - 2Intro- Internationalisation of the corporation: FDI & outsourcing
2 processes used by MNCs to access global markets & source inputs
- Global value chains
Analytical tool to understand power rel., within GSCs
How MNCs command control of firms & suppliers across GE without taking ownership of firms legally
- Impact of GVCs on trade/development - 3MNCs- Firms that have operations in 2 or more countries
- Most public face of globalisation
- Pervasive within GPE - 4Internationalisation of MNCs- Through FDI & subcontracting
- Allowed them to internationalise through GE
- FDI - setting up factories, assets in foreign countries; employing workers in those countries to produce goods/services directly for that corporatipn
- Subcontracting - don't build factories, but issue contacts to other firms/suppliers to produce particular parts/components of production process
- 2008 = over 82 000 MNCs within GE, w other 810 000 affiliates
- Employment of over 77m people through MNCs & their supply chains
- Incredibly power actors - 5MNCs as defining feature of globalisation & have become powerful pol. actors- Ability to set rules & standards rel. to trade & production in own supply
- Involved in private security contracting involved in military conflict - trad. viewed as state-dominated
- Even written clauses into FTAs within WTO - Tripps Agreement on intellectual property - 6FDI- MNCs own assets & employ people in foreign countries
- FI from EIC in 17th C & 'hierarchical coordination' - est. of trading posts, building factories/facilities for trade
- FI 19th C well-est. through 'vertical integration' of production process
- Corporations imports/exports from colonial to developed countries
- GS own activities & contributing to manufacturing/export of goods
- MNCS responded to protectionism by setting up manufacturing capabilities in foreign markets (avoids import tariffs)
- Horizontal investments abroad, allowed them to remain in foreign markets
- Protectionism in Europe - GM/Ford entering into market through FDI - 7Subcontracting- MNCs outsource production to independent firms through 'contracts'
- Utilising info to find companies who can produce parts of production process for them
- V flexible for firms
- Can switch suppliers
- No need to 'own' factories abroad
- Subcontracting leads to creation of GVCs - 8Increase in FDI & subcontracting - 20th C- FDI increased dramatically from 1892
- Increase in FDI inflows - investment into countries
- From $59bn in 1982 to $1697bn 2010
- Key for developing countries
- Important source of revenue - stable source of foreign capital
- Developing countries see benefits of having FDI - tech transfer, development of managerial skills, source of employment
- Subcontracting harder to acquire data: trade in components can offer indicator of significance of GVCs
- Lack of data - movement of components
- V. complicated
- Transformed countries in GS - 9Why dramatic growth in MNC international activity1. Establishment of GATT/WTO fostered global institutional shift towards trade liberalisation
Many pol. factors incl. establishments
Reduction in tariffs, facilitating easier flow of goods & capital across borders
Institutions complimented by neoliberalism's dereg, privatisation
2. Neoliberal doctrine impacted on states in GN & GS
- Creation of national policy frameworks within states to support econ globalisation
- More friendly environ for MNCs
3. EA manufacturing model set precedent for est. of GVCs
- EA moved into GVCs sphere
- Competitive pressure on US - Japan in automobile & electronic industries - need for US to lower labour costs - outsource to low cost locs (EA)
- New intl. division of labour - 10Role of tech advancements1. Corporations increased in size
- US due to spread of iron, coal etc.
- Large-scale production in US
- Telegraph & railways - geog reach
- Ideas of modern hierarchical corporations
2. Commercial jet services +standardised container shipping
- from 1950s - improved efficiencies & cost-rel. issues declined
- Speak to suppliers & make rapid adjustments in real-time
3. Rev in ICT - spread of internet meant MNCs could codify product & process specification
- Innovative - 11Governance in GVCs- Governance - refers to ways through which MNCs choose to coordinate their productive activities
- Can buy parts/components -enter subcontracting rel. or make everything in-house - manage themselves - FDI key
- Firms must assess how ot organise production best in rel. to 'transaction costs'
- Neoclassical economists argued in perfect world of comp markets would be most efficient option for MNCs - info costless, no barriers to trade
- Not case due to opportunism - 12GVCs: hierarchy & markets- GVCs represent governance between market & vertical integration
- Buyer-driven vs producer-driven : buyer-driven chains driven by large retailers w brand names using branding, design, marketing to exert control over decentralised network of suply chains
- Producer-driven chains larger, integrated enterprises control forward forward & backward linkages - automobile industry - 13Rel. in GVCs- Key rel.
- Some enable suppliers to learn from MNCs in key ways & develop meaningful rel.
- Others captive - suppliers beholden to MNCs - forced into selling e.g., food production
- UNILEVER buys over 12% of tea supply = suppliers may be forced to comply w their terms
- MNCS often dictate prices, T&Cs of production in powerful ways with adverse impact on devpt - 14Why does governance matter?- Type of rel. between supplier/buyer determines benefits of GVC participation
- How country chooses to insert itself into GE key - captive or modular rel.
- Barriers to entry are significant factor in determining power rel
- Power rel. matter for econ & social upgrading - v. hard to move up value chain - find specialism. MNCs can move from one country/sector to another
- Garment industry to SE Asia, Africa - worsening working conditions
- MNCs look for cheapest - 15Barriers to entry- Production of fast-fashion items low barriers to entry for developing countries - low tech
- Many developing advanyages have CA in lost-cost, unskilled labour
- High-tech industries higher barriers to entry - depend on tech, research
- Difficult for poorer countries to acquire value in GVC
- Firms dependent on low wages consistently face downward pressure on prices - Bangladesh garment industry squeezed in GSCs
- Impact on wages, devpt. issues - 16GVCs & development- Participation of GS in GVC commonplace
- Pushed as major development strategy by leading econ & financial institutions - WB/IMF/OECD, pro-trade liberalisation bodies
- Advocate developing countries inserting themselves into sectors in which they may have comparative advantage
- How can countries catch up w MNCS - have high-value adding parts of production
- Developing countries advised on how to engage in GVCs to econ develop
- Yet structure of GVCs prevents econ upgrading - due to lead firms - MNCs holding onto high-value adding - 17Apple GVC- Distribution of value
- Limited opps for upgrading
- Major suppliers as Foxconn - found CA by basing in China - low labour costs, horrific working conditions: overtime, poverty wages, pension strikes - 18GVC & developmnet- Working conditions in export-oriented industries (feeding GVCs) - adverse working conditions
- Frequent abuses of workers' rights & production in authoritarian & repressive contexts
- Responsibility of MNCs in regulating conditions within production process
- Firms producing in authoritarian countries subcontracting to repressive regime
- Lax regulation leading to CA for producers keen to engage in GVCs
- Low wages & workers working overtime as CA for producers
- Countries caught in entanglement - race to bottom - 19H&M & forced labour in Xinjiang- Major cotton-producing region in China - allegations of forced labour rife (tied to Uyghur Autonomous Region)
- W fashion retailers linked to sourcing from region - scrutiny
- Backlash in Chinese market for H&M - leading to ongoing boycott by some consumers
- CSR pressure
- Pressure in Chinese market - 20MNCS & Labour Rights- Widespread documentation of labour exploitation by NGOs pushed MNCs into 'governance' role
- Debacle - since 1990s documentation by NGOs in Europe
- Forced MNCs into governance role - exercising roles over labour/environ standards
- Neoliberalism & perceived 'decline of state' = private governance - corporations should fill gap from decline of state
- GVCs & price pressures - against reg & governance aspects
- Suppliers push for tight deadlines, working overtime
- MNCS developed codes of conduct - 21Gibbon et al on governing GVCs- Embrace of GVC analysis among economists, anthropoligists, intl. agencies interested in poverty alleviation
- Mainstream IPE posits problem of global econ governance in terms of institutions (WTOs, IFIs, G-8)
- Concerned w how powerful/effective they are via regional/national governance systems
- Radical PE looks at rel. between global capital & institutions - as well as WEF
- Divisions over effectiveness of global econ governance
- Role played by powerful 'lead' firms in global econ governance - 22Gibbon et al on foundations of concept of GVC gocernance- Rests on assumption that disintegration of production & its re-integration through inter-firm trade are processes initiated/institutionalised in particular forms due to decision-making by certain actors. Large firms manage access
- 23Gibbon et al on 3 stages in1. Governance as driving
2. Governance as coordination
3. Governance as normalisation - 24Gibbon et al: governance as driving- Gereffi '94 - governance as 'authority and power relations that determine how financial, material, and human resources are allocated & flow within a chain'
- Producer driven: capital-intensive sectors in which high-tech/capital requirements constituted main entry barriers - reinforced status of lead firms (large manufacturers)
- Buyer-driven: labour-intensive sectors - market info, product design, marketing costs set entry barriers for lead
- Criticisms for being too narrow/abstract, distinction between two types becoming redundant, GVC doesn't comprise homogeneous entities - 25Gibbon et al: governance as coordination- Electronic industry (Sturgeon, 2001) - conceptualisation of governance shifted
- Functions brand-name computer companies (Dell) externalised to global contract manufacturers not low profit - not same as subcontractors
- Suppliers less dependent on lead firms - modular rel. - 26- Gereffi et al (2005) w 5 governance areas:a) market rel: dominant when transactions easily codified, suppliers can produce w/out buyers' input
b) modular value chains - when suppliers can use generic manufacturing competence to supply full packages, lowering need for buyers to monitor lots
c) relational value chains - product specifications cannot be easily codified - complex products
d) captive VCs - ability to codify complex product but capability of suppliers low - high buyer intervention
e) hierarchy - product specifications cannot be codified - in house - 27Gibbon et al: governance as 'normalisation'- Project of realigning given practice so it mirror/materialises a standard/norm
- Convention Theory (Boltanski & Thevenot, '91) - econ action is always framed by systems of justification - 28Scholars on global governance- Bair '08 - how embedded networks 'go global' due to rel. governance
- Palpacuer '08 - explores rel. between rise from '90s onward of shareholder-based forms of corporate governance - 29Gereffi et al: Fragmentation, coordination & networks in GPE- Value-added chain
- Fragmentation - separation of different parts of production process - intl. Integration of trade, disintegration of production
- MNC disintegrate - CA in outsourcing
- Transaction costs approach explain how global production organised - through markets/within transactional firms
- Problem of opportunism - trust, reputation, mutual dependence dampen opportunistic behaviour
- Key - coordination & control of global scale production systems can be achieved w/out direct ownershipq - 30Gereffi et al on types of governances- Sturgeon on Lee (01) on 3 types of rel.
1. Commodity suppliers provide standard products through arms-length market rel.
2. Captive suppliers make non-standard products
3. 'Turn-key supplier' - produces customised products for buyers
- 3 determinants of governance: complexity of transaction, codifiability of info, capability of suppliers
- Lead firms increase complex when place new demand on value chain (product differentiation/just-in-time supply
- Integration of new suppliers into GVCs - coordination challenge - producers in deveping countries expected to meet requirements that don't yet apply to thrit domestic market
- governance types illuminate how power operates in GVCs - 31Dynamic value chain: Apparel industry- from captive to rel. value chains
- Shift due to growing capabilities of global supply-base
- EA as epicentre of export-oriented apparel production - from captive value chains to domestically integrated/higher-value-added form of exporting
- Requires more complex coordination, knowledge exchange, suppliers autonomy
- Enables local firms to learn how to make intl. competitive consumer goods
- Importance of trade rule = US import quotas fuelled spread of global production networks in apparel from 1970s - 32US electronic industry: from hierarchy to modular value chains (Gereffi et al)- 20th C dominated by large, vertically integrated firms
- Major electronics firms sold off to contract manufacturers - significant share of world's electronic production capacity
- E.g., Solectron grew from 3500 employees in Silicon Valley to global powerhouse in 2000 w more than 80 000 employees in 50 locations, close to $20bn in revenues
- Making design spec more complex, less standardised - harder to lead firms to switch/share suppliers - 33Gereffi conclusions- Dynamic, overlapping nature of GVCs due:
1. Info complexity changes as lead firms seek to obtain more complex output/services - reduces effective level of supplier capabilities as may not meet new requirements
2. Tension between codification & innovation
3. Supplier competences change over time
- Increasing capabilities in supply-base help push GVCs away from hierarchy & captive networks, towards rel./modular/market
- As standards/IT/capabilities of suppliers improve, modular form plays an increasingly central role in GE
- Shift towards value chain fragmentation has been driven by cost & risk advantages of outsourcing - 34Jeffrey Henderon et al on GVCs- Perceived as central agent in devpt. as state, as well as IOs (WB/IMF), social movements - failed to consider firm
- To understand dynamics of devpt. in given place, must comprehend how places are being transformed by flows of capital, labour, knowledge, power
- Globalisation undercut state-centred notions
- GPN - 35Henderson: critical reflections- Michael Porter (1990) value-adding chain - emphasises interconnected structures of econ activities - each element in chain adding value to process
- Filiere - system of agents producing & distributing goods/services - understanding of econ processes = analysis of dynamics of econ integration
- Focus on 2 types of agent: large firms/state institutions
- Gereffis' GCC as most useful conceptualisation - focus on dynamics of global organisation of production w particular affinity w intl. division of labour & its consequences - 36Jeffrey Henderson on Network concepts- Weakness of chain approach - not linear/vertical process but highly complex network structures
- Actor-network theory (ANT) emphasises relationality of both objects & agency
- Fails to consider structural power rel. that shape production networks
- Ernst's version of GPN - organisational innovation combines conc. dispersion of value chain across firm & national boundaries
- Firms establish these GPNs to access flexible, specialised suppliers in lower-cost locs.
- GPN supersedes TNCs as most effective form of industrial organisation due ot onset of liberalisation policies - 37Henderson on GPN- Discourse of networks more inclsuove, empirically adequate & analytically fertile
- Allows for greater complexity & geographical variation in producer-consumer rel. than GCC approach
- Recognises that
a) firms/govt/actors have diff priorities r.e. profitability, growth, econ devpt
b) input-output structures within networks central
- Directs attention to
a) networks of firms involved in R&D, design, production, marketing
b) distribution of corporate power within networks
c) significance of labour/processes of value creation
d) institutions that influence firm strategy - 38Henderosn on conceptual categories1. Value
- Creation of value within each firms incorporated into given GPN
- Conversion of labour power into actual labour - considers employment, skill, working conditions, production tech
- Circumstances under which value can be enhanced
- Possibilities that exist for value to be captured
2. Power
- Corporate power - extent to which lead firm in GPN has capacity to influence decision & resource allocation
3. Embeddedness
- Connect aspects of social & spatial agreements in which firms are embedded - 39Henderson : conceptual dimensions- Firms - even in same sector, differ in terms of strategic priorities, attitudes to labour rel., rel w suppliers
- Sectors - same sector firms create GPNs w some similarity - tech/products/constraints - similar way of creating CA
- Networks - within issues of governance arise - way power is mobilised/exercised
- Institutionns - institutional agreements impact locally & globally on GPN. Important in generating value locally, setting standards for labour rel/working conditions/wage levels
- Central q - can GPNs deliver sustained econ & social development in locs they incorporate
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- Year 2 Global Political Economy (Global value chains) Karteikarten am Global Value Chains, erstellt von Isla Duguid am 28/04/2022.
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- Isla Duguid · Apr 2022
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- 29 Apr 2022
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