GEOG 217 Lecture Notes - Lecture 17: Indian Railways, Core Countries, Living Wage
18 May 2018
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Lecture 17 – March 12th
The Global-Local Nexus
What is globalization?
o The widening, deepening, and speeding up of worldwide interconnectedness
in all aspects of contemporary social life
o Globalization as a process?
• Changes in relationships between capital, labour and the state
• Increased interdependence across national borders
Why did globalization emerge?
Coincided with widespread disruptions in the social fabric:
• Local raw material shortages
• Oil & commodity prices
• Wage costs in developed countries
o As cost of living rises, wages wise
o Push firms to look for places to produce more cheaply elsewhere
• Fiscal deficits faced by many governments
• Instability of the Bretton Woods monetary system
o Bretton Woods- world leaders got together, question: how to stabilize
financial markets?
o Tied $ to gold standard, which helped regulate exchanges between countries
o IMF, World Bank emerges
o Bretton Woods becomes unstable- US currency no longer is backed by gold, a
free currency- destroys monetary system = floating currencies!
Coincided with technological change:
• Telecommunications (break down time and space barriers)
o Telegraph
o Telephone
o Television
o Internet
Coincided with economic development:
• Search for markets
• National markets saturated
• Growth in internationalization
4 key factors of Globalization (things that have changed dramatically with globalization)
1. Production- MNCs
2. Trade
3. Services
4. Labour (NIDL)- New International Division of Labour
1st key factor: Production
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Core countries (centers)
• R&D
• Eg. US + few others core research places
Semi-periphery
• Secondary R&D
• Eg. Hong Kong, Australia
Satellite countries/periphery
• Manufacturing in factories
• E.g. India, China, Peru
• Production units:
o Low labour costs
o Trade unions have little power
o Infrastructure is cheap to build
o MNCs welcomed by govts- tax incentives, free trade zones
*This ordering of regions also = base wage rate, wages are cheaper in peripheral counties,
goods made there and consumed in other places
Multinational Corporations: a firm which has the power to coordinate and control
operations in more than one country, even if it does not own them
• Pushing products in different regions, standardizing a globalized world, similar
cultural touchstones in different places
Core/semi-periphery: research and development & HQ
Satellite countries: production units
• Low labour costs
• Trade unions have little power
• Infrastructure is cheap to build
• MNCs welcomed by govts, tax incentives, free trade zones
Positive or negative roles?
• Appropriate technology transfer?
• Introduces competition to domestic firms?
o And this itself is good or bad? (or stimulus for more innovation, providing
competition for local industries stimulating industries, forcing innovation)
o Break up oligopolies?
o Break cycles of corruption, kleptocracy?
• Pollution haven hypothesis: avoiding environmental laws back home?
o Most evidence points away from this, labour costs are usually a bigger
driving factor. However, once there, if environmental laws are more lax, even
better
▪ Cheaper wage rates more the focus
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
What is globalization: the widening, deepening, and speeding up of worldwide interconnectedness in all aspects of contemporary social life, globalization as a process, changes in relationships between capital, labour and the state. Imf, world bank emerges free currency- destroys monetary system = floating currencies! Coincided with technological change: telecommunications (break down time and space barriers, telegraph, telephone, television. Coincided with economic development: search for markets, national markets (cid:498)saturated(cid:499, growth in internationalization. 4 key factors of globalization (things that have changed dramatically with globalization: production- mncs, trade, services, labour (nidl)- (cid:498)new international division of labour(cid:499) India, china, peru: production units, low labour costs, trade unions have little power. Infrastructure is cheap to build: mncs welcomed by govts- tax incentives, free trade zones. *this ordering of regions also = base wage rate, wages are cheaper in peripheral counties, goods made there and consumed in other places. Satellite countries: production units: low labour costs, trade unions have little power.
