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Global shift mapping the changing contours of the world economy


SIXTH EDITION

GLOBAL SHIFT



SIXTH EDITION

GLOBAL SHIFT

MAPPING THE CHANGING CONTOURS
OF THE WORLD ECONOMY

PETER DICKEN

THE GUILFORD PRESS
New York London


For Lesley and Roger


Copyright © 2011 Peter Dicken
First published in the United States of America by
The Guilford Press
A Division of Guilford Publications, Inc.
72 Spring Street, New York, NY 10012
www.guilford.com
All rights reserved
No part of this book may be reproduced, translated, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, microfilming, recording, or otherwise, without written permission
from the Publisher.
Printed in the United States of America
This book is printed on acid-free paper.
Last digit is print number: 9

8

7

6

5

4

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1

Library of Congress Cataloging-in-Publication Data
Dicken, Peter.
Global shift: mapping the changing contours of the world economy / by Peter
Dicken. — 6th ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-60918-006-5 (pbk. : alk. paper)
1. Industries — History — 20th century. 2. International economic relations.


3. International business enterprises. 4. Economic policy.
5. Globalization — Economic aspects. 6. Technological innovations —
Economic aspects. I. Title.
HD2321.D53 2011
338.09’051–dc22
2010038275


Contents

List of Abbreviations
Preface to the Sixth Edition
About the Companion Website
1

Introduction: Questioning ‘Globalization’
What in the world is going on?
Conflicting perspectives on ‘globalization’
Grounding ‘globalization’: geography really does matter

PART ONE THE SHIFTING CONTOURS OF THE
GLOBAL ECONOMY
2

Global Shift: Changing Geographies of the Global Economy
What’s new? The imprint of past geographies
Roller-coasters and interconnections
The changing contours of the global economic map:
global shifts in production, trade and FDI
The dynamic global economic map

PART TWO PROCESSES OF GLOBAL SHIFT

ix
xi
xv
1
1
4
6

11
13
14
16
24
47

49

3

Tangled Webs: Unravelling Complexity in the Global Economy 51
An analytical point of entry
51
Institutional macro-structures of the global economy
54
Global production networks
56
Even in a globalizing world, economic activities are
geographically localized
69
Networks of networks
71

4

Technological Change: ‘Gales of Creative Destruction’
Technology and economic transformation
Processes of technological change: an evolutionary perspective
Time–space shrinking technologies

75
76
76
81


vi

Contents

Technological innovations in products and processes
Geographies of innovation

97
102

5 Transnational Corporations: The Primary ‘Movers and
Shapers’ of the Global Economy
Why firms transnationalize
How firms transnationalize
TNCs as ‘networks within networks’
Configuring the TNCs’ internal networks
TNCs within networks of externalized relationships
Perpetual change: reshaping TNCs’ internal and external networks
The myth of the ‘global’ corporation

109
110
116
121
127
144
158
162

6 The State Really Does Matter
‘The state is dead’ – oh no it isn’t!
States as containers
States as regulators
States as competitors
States as collaborators

169
170
172
178
199
202

7 The Uneasy Relationship between TNCs and States:
Dynamics of Conflict and Collaboration
The ties that bind
Bargaining processes between TNCs and states

221
221
225

PART THREE THE PICTURE IN DIFFERENT ECONOMIC
SECTORS

241

8 ‘Making Holes in the Ground’: The Extractive Industries
Beginning at the beginning
Production circuits in the extractive industries
Global shifts in the extractive industries
Volatile demand
Technologies of exploring, extracting, refining, distributing
The centrality of state involvement in the extractive industries
Corporate strategies in the extractive industries
Resources, reserves and futures

243
243
245
247
251
253
255
260
266

9 ‘We Are What We Eat’: The Agro-Food Industries
Transformation of the food economy: the ‘local’ becomes ‘global’
Agro-food production circuits
Global shifts in the agro-food industries
Consumer choices – and consumer resistances
Transforming technologies in agro-food production

270
270
272
275
279
282


Contents

The role of the state
Corporate strategies in the agro-food industries

vii

285
288

10 ‘Fabric-ating Fashion’: The Clothing Industries
Changing rules
The clothing production circuit
Global shifts in the clothing industries
Changing patterns of consumption
Production costs and technology
The role of the state and the Multi-Fibre Arrangement
Corporate strategies in the clothing industries
Regionalizing production networks in the clothing industries

301
302
302
304
306
308
312
314
322

11 ‘Wheels of Change’: The Automobile Industry
All change?
The automobile production circuit
Global shifts in automobile production and trade
Changing patterns of consumption
Technological change in the automobile industry
The role of the state
Corporate strategies in the automobile industry
Regionalizing production networks in the automobile industry

331
331
332
334
337
339
342
344
356

12 ‘Making the World Go Round’: Advanced Business
Services – Especially Finance
The centrality of advanced business services
The structure of advanced business services
Dynamics of the markets for advanced business services
Technological innovation and advanced business services
The role of the state: regulation, deregulation, reregulation
Corporate strategies in advanced business services
Geographies of advanced business services

367
368
369
372
373
377
380
390

13 ‘Making the Connections, Moving the Goods’:
Logistics and Distribution Services
Taking distribution for granted
The structure of logistics and distribution services
The dynamics of the market for logistics services
Technological innovation and logistics and distribution services
The role of the state: regulation and deregulation of logistics and
distribution services
Corporate strategies in logistics and distribution services
Logistics ‘places’: key geographical nodes on the global logistics map

399
399
400
403
404
410
413
423


Contents

viii

PART FOUR WINNING AND LOSING IN THE GLOBAL
ECONOMY

427

14 ‘Capturing Value’ within Global Production Networks
Placing places in GPNs
Creating, enhancing and capturing value in GPNs
Upgrading (or downgrading) of local economies within GPNs

429
429
432
433

15 ‘Destroying Value’: Environmental Impacts of Global
Production Networks
Production–distribution–consumption as a system of materials
flows and balances
Disturbing the delicate balance of life on earth: damaging the
earth’s atmosphere
Fouling the nest: creating and disposing of waste

457
467

16 Winning and Losing: Where You Live Really Matters
Location matters
Incomes and poverty
Where will the jobs come from?
Populations on the move

475
476
479
492
511

17 Making the World a Better Place
Global shifts: pasts and futures
‘The best of all possible worlds’?
TNCs and corporate social responsibility
States and issues of global governance
A better world

524
525
528
530
537
550

Bibliography
Index
About the Author

562
594
607

454
454


List of Abbreviations
ABS
AFTA
APEC
ASEAN
B2B
B2C
BRIC
CAFTA
CAP
CME
CSO
CSR
CUSFTA
ECB
ECE
EDB
EMU
EOI
EPB
EPZ
ETDZ
EU
FCCC
FDI
FTAA
GATS
GATT
GCC
GCSO
GDP
GHG
GM
GNH
GNI
GNP
GPN
GSP

Advanced business services
ASEAN Free Trade Agreement
Asia–Pacific Economic Cooperation Forum
Association of South East Asian Nations
Business-to-business
Business-to-consumer
Brazil, Russia, India, China
Central American Free Trade Agreement
Common Agricultural Policy (EU)
Coordinated market economy
Civil society organization
Corporate social responsibility
Canada–US Free Trade Agreement
European Central Bank
Eastern and Central Europe
Economic Development Board (Singapore)
European Monetary Union
Export-oriented industrialization
Economic Planning Board (South Korea)
Export processing zone
Economic and Technological Development Zones (China)
European Union
Framework Convention on Climate Change
Foreign direct investment
Free Trade Area of the Americas
General Agreement on Trade in Services
General Agreement on Tariffs and Trade
Global commodity chain
Global civil society organization
Gross domestic product
Greenhouse gas
Genetic modification
Gross national happiness
Gross national income
Gross national product
Global production network
Generalized system of preferences


List of Abbreviations

x

GVC
HVF
ICT
ILO
IMF
IPCC
ISI
IT
JIT
LAFTA
LAIA
LDC
LME
MAI
METI
MFA
MFN
MITI
MNC
MSW
NAC
NAFTA
NGO
NIE
NTB
OECD
OFC
OPEC
OPT
PLC
PRC
PTA
R&D
RIA
RTA
SEZ
SOE
SUV
SWF
TCC
TEU
TNC
TNI
TRIMS
TRIPS
UNCTAD
WTO

Global value chain
High-value foods
Information and communications technology
International Labour Organization
International Monetary Fund
Intergovernmental Panel on Climate Change
Import-substituting industrialization
Information technology
Just-in-time
Latin American Free Trade Area
Latin American Intregation Association
Less developed country
Liberal Market economy
Multinational Agreement on Investment
Ministry for Economy, Trade and Industry (Japan)
Multi-Fibre Arrangement
Most-favoured nation
Ministry of International Trade and Industry (Japan)
Multinational corporation
Municipal solid waste
Newly Agriculturalizing Country
North American Free Trade Agreement
Non-governmental organization
Newly Industrializing Economy
Non-tariff barrier
Organization for Economic Cooperation and Development
Offshore financial centre
Organization of the Petroleum Exporting Countries
Outward Processing Trade
Product life cycle
People’s Republic of China
Preferential trading arrangement
Research and development
Regional integration agreement
Regional trade agreement
Special Economic Zones (China)
State-owned enterprise
Sports utility vehicle
Sovereign wealth fund
Transnational capitalist class
Treaty on European Union
Transnational corporation
Transnationality index
Trade-related investment measures
Trade-related intellectual property rights
United Nations Conference on Trade and Development
World Trade Organization


Preface to the Sixth Edition

As this sixth edition is published in 2011, it is exactly 25 years since the publication of the first edition in 1986. That, in itself, is a very sobering thought, for all
kinds of reasons. What began, in the early 1980s, as a faltering, and very naïve,
one-off attempt to make sense of the changing geographies of the world economy
has developed into an evolving longitudinal project. Each subsequent edition, in
effect, constitutes a temporal marker of the empirical changes in the configuration
of the global economy and of changing interpretations of, and attitudes towards,
‘globalization’.
We tend to think of our world as one that is continuously changing. That, of
course, is a truism. Underlying the surface of change there is a great deal of
longer-term continuity. Indeed, one lesson I have learned from monitoring developments in the global economy over these past 25 years is the danger of making
hasty judgements about immediate events and extrapolating them into the future.
Two current examples, one ‘macro’ and one ‘micro’, illustrate my point. Example
one: will the G20 really come to constitute a new global power structure, thus
ending the hegemony of the US-led Western institutions that have dominated
since 1945? Example two: will the huge safety scandal that is currently engulfing
Toyota result in permanent damage to its position as the world’s biggest automobile manufacturer and change the competitive playing field in that industry? In
both cases, as in all others, only time will tell.
However, our collective predictive track record is not especially good. In the
late 1990s, for example, many were predicting the demise of East Asia in the light
of the region’s 1997 financial crisis. How wrong that prediction was. At the same
time, however, the nature of East Asia did change, primarily, although not entirely,
because of the (re-)emergence of China. It is important to keep this methodological problem in mind when we are in the midst of a global financial crisis of
epic proportions. Of course, a great deal of attention is devoted throughout the
book to the current global financial crisis. The world will not be the same as it
was (we hope it will be better) but we cannot clearly see what it will actually be
like. It will depend upon the choices society makes. It is this interplay between
the short and the long term that makes a project like Global Shift so challenging.
The exhortation to ‘watch this space’ can never have been more apt.


xii

Preface
to the
Edition
Shifting the
Contours
of Sixth
the Global
Community

With these principles in mind, the basic aim of this sixth edition, as of its five
predecessors, is to provide a clear path through the dense thickets of what are large,
often conflicting, often confusing, debates and arguments about globalization: to
show how the global economy works and what its effects are. It tries to separate
the reality from the hype: to provide a balanced, grounded – but emphatically not
an uncritical – perspective on a topic often richer in rhetoric than reality. It focuses
on the longer-term, underlying processes of global economic change within
which ‘events of the moment’ can be better understood.
What is new about the sixth edition? It is emphatically not a mere cosmetic
exercise. As in the previous editions, I set out to produce the most up-to-date and
comprehensive account of economic-geographic globalization. Hence, all the
empirical data have been fully updated using the latest available sources as of early
2010. Because maps and charts are so important to this book, there are even more
in this edition. Although the established four-part structure of the book remains,
I make greater use of the concept of the global production network (GPN) as a
major organizing principle throughout the book in order to demonstrate the fundamentally relational nature of the processes involved and to emphasize the
power-laden dynamics of the interactions between transnational corporations,
states, consumers, labour and civil society organizations. Every chapter has been
completely revised and extensively rewritten not only to take into account new
empirical developments but also to incorporate new ideas on the shaping and reshaping of production, distribution and consumption in the global economy. Two entirely
new chapters have been written: one on the extractive industries (Chapter 8), the other
on the environmental impacts of GPNs (Chapter 15). Part Four, in particular, has been
completely redesigned to produce a much tighter argument about the impacts of
globalizing processes on people, places and the environment.
The book is organized into four closely related, but distinct, parts.
Part One focuses on the shifting contours of the global economic map: the ‘global
shifts’ that are continuously reshaping the global economy.
Part Two explores the complex and multifarious ways in which the actors, institutions and processes that make up the global economy interact to produce global
production networks: the ‘gales of creative destruction’ set in motion by new technologies; the increasingly complex and extensive production networks created and
controlled by transnational corporations; the actions of states in their roles as containers of distinctive institutions and practices, as competitors, and as collaborators
with other states; the uneasy relationships between TNCs and states, as each tries
to exercise bargaining power over the other.
Part Three presents six sectoral case studies to illustrate the diverse ways in which
these processes actually operate. Precisely how such networks are configured and
operate, precisely how TNCs, states, labour, consumers and CSOs are involved,
precisely how they are subject to technological pressures, vary enormously
between different kinds of economic activity. The six cases have been carefully
chosen to range across the entire spectrum of economic activities, from the


Preface to the Sixth Edition

basic/primary industries of mineral extraction and agro-food production, through
such key global manufacturing industries as clothing and automobiles, to the
advanced business, financial, logistical and distribution services that provide much
of the ‘lubrication’ of the global economy.
Part Four is concerned with ‘winning’ and ‘losing’ in the global economy: the
problems for national and local economies of capturing value in global production
networks; the destruction of value through environmental degradation; the staggeringly uneven contours of development; and, finally, the questions of how the
world might be made a better place for all.
Global Shift is both a cross-disciplinary and a multilevel book. It deliberately spans,
and draws from, a wide range of academic disciplines, including business and
management, development studies, economics, economic geography, political science and sociology, amongst others. At the same time the book is designed for use
at different levels. On the one hand, my aim has been to make the book accessible
to readers without prior specialist knowledge by ensuring that all key terms are
clearly defined, by avoiding excessive jargon, and by making extensive use of
graphics. On the other hand, for the specialist reader, each chapter contains endof-chapter notes that connect to the extremely extensive and up-to-date research
bibliography. Through such means, the book should be useful to graduate students
and researchers, as well as to policy makers and to people in business. Certainly
my experience of the reception of previous editions suggests that this is the case.
***
With each successive edition, my debt to friends, colleagues and users of the book
widens and deepens. Indeed, without a rich network of friends and colleagues
from all round the world, a book like this simply could not exist. To all of them,
I offer my sincere thanks and I hope they will forgive me for not mentioning
them all by name. However, several people deserve special mention.
Roger Lee (despite the handicap of being a Manchester United supporter) has
provided the most remarkable support and inspiration over many years and, above
all, with Lesley, friendship and sharing of mutual interests and pleasures. I hope
they are not too embarrassed by the book’s dedication. Nick Scarle, Senior Cartographer at the University of Manchester, has produced all the illustrations for
every edition in a truly creative manner. Always superb, they have simply got better and better. Everybody who uses this book praises the graphics and I only wish
I could take the credit for them.
I am very fortunate to remain part of the community of geographers at the
University of Manchester and I much appreciate the friendship of colleagues
there, especially Gavin Bridge, Noel Castree, Neil Coe, Martin Hess and Kevin
Ward. Gavin, Neil and Martin deserve specific thanks. Gavin provided invaluable
advice and guidance on the extractive industries, without which I could not have
produced Chapter 8 (of course, he bears no responsibility for any weak parts of

xiii


xiv

Preface to the Sixth Edition

that chapter). Neil and Martin have been superb collaborators over a number of
years, most notably, along with Henry Yeung, in developing the global production
network (GPN) framework for which Manchester has something of a reputation.
Neil specifically provided the data for Figure 9.10.
I particularly want to thank Henry Yeung for so many things, both professional
and personal, since he first burst into my office in 1992. My life was never the
same after that! I am immensely grateful to Liu Weidong, for introducing me to
China, providing help with Chinese materials and translating an earlier edition
into Chinese; and Anders Malmberg, for involving me in the vibrant academic
community at Uppsala and for suggesting the subtitle (or was it Anna?), as well as
many other ways of improving the book over the years. Kris Olds and Ray Hudson made detailed evaluations of the various editions that made me think about
some ways forward. None of these, of course, bears any responsibility for all the
weaknesses that remain, but they can certainly claim credit for any strengths and
I am enormously grateful to all of them.
I am extremely grateful to the team at Sage Publications in London. Sage is a
publisher for whom I am proud to write. In particular, Robert Rojek is the most
caring, encouraging and stimulating publisher and friend. He has been truly supportive in every way. He is also great to go to galleries with. Katie Metzler has
done brilliant work in helping to develop this edition in so many ways. Katherine
Haw has lavished great skill and care on creating a visually stimulating book. Fiona
Moore of Royal Holloway, University of London has done an excellent job with
the support materials for business and management users of the book. Thanks, too,
to Seymour Weingarten and the staff at The Guilford Press in New York.
As always, of course, it all ultimately comes back to the people who matter to
me most of all: my (now dispersed) family. Sadly, they continue to treat me with
the disrespect I don’t deserve. But they are all – Christopher and Annika in Germany; Michael, Sally, Jack and Harry in Switzerland – such stimulating people and
such great fun to be with. And then there is my wife, Valerie, who makes everything worthwhile and who (still) does so with so much love, humour and tolerance, despite threatening to leave me every time I start a new edition. But she’s
still here. And finally there are JSB, LvB, GM, WAM, HO, DDKB, MCO, WB and
so many, many more.
Peter Dicken
Manchester, 2010


About the Companion Website

Be sure to visit the companion website accompanying the sixth edition at
www.guilford.com/p/dicken to find a range of teaching and learning materials for lecturers and students. The website has been expanded to offer tailored
resources for lecturers and students in Geography, International Business, Sociology
and Politics. Online readings from journals have been provided for each discipline,
in addition to the resources designed for all of Global Shift’s diverse users.
FOR LECTURERS:
PowerPoint Slides for each chapter containing all of the tables and figures from
the book are available to be used in class.
Lecturers’ Notes, Case Studies and additional pedagogical PowerPoint
Slides are available to download from the website for International Business lecturers. The slides can be edited by instructors to suit their needs and teaching
styles.
FOR STUDENTS:
Full text Online Readings compiled from key journals in the field by academics
in Geography, International Business, Sociology and Politics. The full text journal
articles are linked to the discussion within the book and provide additional coverage
of key topics in each chapter.
A Glossary to check your understanding of key terms.
Annotated web links which take you to useful websites where you can find
further empirical data, reports and statistics.



One
INTRODUCTION: QUESTIONING
‘GLOBALIZATION’

CHAPTER OUTLINE
What in the world is going on?
The end of the world?
Confusion and uncertainty
Conflicting perspectives on ‘globalization’
‘Hyper-globalists’ to the right and to the left
‘Sceptical internationalists’
Grounding ‘globalization’: geography really does matter

What in the world is going on?
The end of the world?
On 15 September 2008, the fourth largest US investment bank, Lehman Brothers,
collapsed. It was an unprecedented event in the midst of what was developing into
the biggest global economic crisis since the late 1920s. Although the sudden demise
of Lehman was only one of many casualties in the financial system in 2008, its collapse was highly symbolic. Lehman was one of those institutions that epitomized the
neo-liberal, free market ideology (sometimes known as the ‘Washington Consensus’)
that had dominated the global economy for the past half century. This was the ideology of free and efficient markets: that the market knew best and all hindrances to
its efficient operation were undesirable. But in 2008, all this was suddenly thrown
into question. As one financial institution after another foundered, as governments
took on the role of fire-fighters, and as several banks became in effect nationalized,
the entire market-driven capitalist system seemed to be falling apart.
Question: does the economic turmoil that began in 2008 herald ‘the end of globalization’? Well, it all depends on what we mean by ‘globalization’. It helps if we


2

Introduction: Questioning ‘Globalization’

distinguish between two broad meanings of globalization.1 One refers to the actual
structural changes that are occurring in the way the global economy is organized and
integrated. The other meaning refers to the neo-liberal, free-market ideology of the
‘globalization project’. Of course, the two are not separate. As a result, confusion
reigns. It is too early to say whether the free-market ideology has been irrevocably
changed by the global financial crisis. Many think it has. Others believe that, once
the dust settles, it will be business as usual. That may, or may not, be the case. But
globalization, as we shall see, has never been the simple all-embracing phenomenon promulgated by the free-market ideologists. We need to take a much more
critical and analytical view of what is actually going on over the longer term; to
move beyond the rhetoric, to seek the reality. That is one of the primary purposes
of this book.

Confusion and uncertainty
Globalization is a concept (though not a term) whose roots go back at least to the
nineteenth century, notably in the ideas of Karl Marx. But it has only been in the last
30 years or so that globalization has entered the popular imagination in a really big way.
Now it seems to be everywhere. A Google search reveals millions of entries. Hardly a
day goes by without its being invoked by politicians, by academics, by business and trade
union leaders, by journalists, by commentators on radio and TV, by consumer and
environmental groups, as well as by ‘ordinary’ individuals. Unfortunately, it has become
not only one of the most used, but also one of the most misused and one of the most
confused, terms around today. As Susan Strange argued, it is, too often,
a term … used by a lot of woolly thinkers who lump together all sorts of superficially converging trends … and call it globalization without trying to distinguish
what is important from what is trivial, either in causes or in consequences.2

The current explosion of interest in globalization reflects a pervasive feeling that
something fundamental is happening in the world; that there are lots of ‘big issues’
that are somehow interconnected under the broad umbrella term ‘globalization’. In
the words of one contemporary commentator,
We live in an era in which everything has changed and most things are still
changing. The ice has melted on the familiar landscape of the second half of
the 20th century. Power in all its forms is shifting rapidly and unpredictably. You
might even say that we are at the beginning of history.3

Such feelings of uncertainty are intensified by an increased awareness that what is
happening in one part of the world is deeply – and often very immediately –
affected by events happening in other parts of the world. A crisis in an obscure
financial market (the US subprime housing market) spreads almost instantaneously


Introduction: Questioning ‘Globalization’

to far distant places. Part of this is simply the result of the revolution in electronic
communications that has transformed the speed with which information spreads.
Nowadays, we hear about events on the other side of the world virtually as they
happen – in ‘real time’. But part of it is also to do with the fact that many of the
things we use in our daily lives are derived from an increasingly complex geography
of production, distribution and consumption, whose scale has become, if not totally
global, at least vastly more extensive, and whose choreography has become increasingly intricate. Many products, indeed, have such a complex geography – with parts
being made in different countries and then assembled somewhere else – that labels
of origin no longer have meaning.
To the individual citizen the most obvious indicators of change are those which
impinge most directly on her/his daily activities: making a living, acquiring the
necessities of life, providing for their children to sustain their future. In the industrialized countries, there is fear – very much intensified by the current financial crisis that the dual (and connected) forces of technological change and global shifts in the
location of economic activities are adversely transforming employment prospects.
The current waves of concern about the outsourcing and offshoring of jobs in the
IT service industries (notably, though not exclusively, to India), or the more general
fear that manufacturing jobs are being sucked into a newly emergent China or into
other emerging economies, suddenly growing at breakneck speed, are only the most
recent examples of such fears. At the same time, the spectres of global climate change
and energy uncertainties raise even bigger questions over the future.
But the problems of the industrialized countries pale into insignificance when set
against those of the poorest countries in what used to be called the ‘Third World’.
Although there are indeed losers in the developed and affluent countries, their
magnitude is totally dwarfed by the poverty and deprivation of much of Africa and
of many parts of South Asia and of Latin America. The development gap continues
to widen, the disparity between rich and poor continues to grow. It is, of course,
totally naïve to explain all such problems in terms of a single causal mechanism
called ‘globalization’:
Establishing a link between globalization and inequality is fraught with difficulty, not only because of how globalization is defined and how inequality is
measured, but also because the entanglements between globalization forces
and ‘domestic’ trends are not that easy to separate out.4

Despite, or perhaps because of, its ‘woolliness’, globalization generates heated and
polarized argument across the entire political and ideological spectrum. Most dramatic of all, since the turn of the millennium, has been the proliferation of global
protest movements: the explosion of street demonstrations at major international
political meetings, notably of the WTO, the G8 and, most recently, the G20. These
have involved a remarkable mélange of pressure groups, ranging from longestablished civil society organizations (CSOs) to totally new groups with either very

3


4

Introduction: Questioning ‘Globalization’

specific, or very general, foci for their protest, together with anarchist and revolutionary
elements with a broad anti-capitalist agenda.
But beyond these ‘organized’ movements, there is growing evidence in worldwide opinion polls of wide divergences of opinion on whether globalization is good
or bad, whether it is proceeding too quickly or proceeding too slowly. A poll of
34,500 people in 34 countries, commissioned by the BBC World Service in 2008,
concluded that
in 22 out of 34 countries around the world, the weight of opinion is that ‘economic globalization, including trade and investment’ is growing too quickly …
Related to this unease is an even stronger view that the benefits and burdens
of ‘the economic developments of the last few years’ have not been shared
fairly … In developed countries, those who have this view of unfairness are
more likely to say that globalization is growing too quickly … In contrast, in
some developing countries, those who perceive such unfairness are more
likely to say globalization is proceeding too slowly.5

There is, in fact, a highly differentiated geography of the awareness of, and attitudes
towards, globalization.6

Conflicting perspectives on ‘globalization’
The primary focus of this book is the global economy. There are, of course, other
forms of globalization - political, cultural and social – and these are often difficult
to separate. Indeed, the ‘economy’ itself is not some kind of isolated entity. Not only
is it deeply embedded in social, cultural and political processes and institutions but
also these are, themselves, often substantially imbued with economic values. Not
surprisingly, therefore, this is a highly contested topic. In this section, we identify two
of the major positions within the ‘globalization’ debate.7

‘Hyper-globalists’ to the right and to the left
Probably the largest body of opinion – and one that spans the entire politicoideological spectrum – consists of what might be called the hyper-globalists, who
argue that we live in a borderless world in which the ‘national’ is no longer relevant.
In such a world, globalization is the new economic (as well as political and cultural)
order. It is a world where nation-states are no longer significant actors or meaningful economic units and in which consumer tastes and cultures are homogenized and
satisfied through the provision of standardized global products created by global
corporations with no allegiance to place or community. Thus, the ‘global’ is claimed
to be the natural order, an inevitable state of affairs, in which time–space has been
compressed, the ‘end of geography’ has arrived and everywhere is becoming the


Introduction: Questioning ‘Globalization’

Degree of functional integration of economic activities

High

5

Pure
globalization

Low

High

Extent of geographical spread of economic activities

Figure 1.1 Globalization as inevitable trajectory: the hyper-globalist view

same. In Friedman’s terms, ‘the world is flat’.8 Such a hyper-globalist view is shown
in Figure 1.1 as an inexorable process of increasing geographical spread and increasing functional integration between economic activities.
This hyper-globalist view of the world is a myth. It does not – and is unlikely
ever to – exist. Nevertheless, its rhetoric retains a powerful influence on politicians,
business leaders and many other interest groups. It is a world-view shared by many
on both the political right and the political left. Where they differ is in their
evaluation of the situation and in their policy positions.
x To the neo-liberals on the right – the pro-globalizers - globalization is an ideological project, one that, it is asserted, will bring the greatest benefit for the
greatest number. Simply let free markets (whether in trade or finance) rule and
all will be well. The ‘rising tide’ of globalization will ‘lift all boats’; human material well-being will be enhanced. Although the neo-liberal pro-globalizers recognize that such a state of perfection hasn’t yet been achieved, the major
problem, in their view, is that there is too little, rather than too much, globalization.9 Globalization is the solution to the world’s economic problems and
inequalities.This, then, is the global manifestation of the ‘Washington Consensus’
referred to earlier: the ideology of free and efficient markets regardless of
national boundaries.
x To the hyper-globalizers of the left – the anti-globalizers – globalization is the
problem, not the solution.10 The very operation of those market forces claimed to
be beneficent by the right are regarded as the crux of the problem: they are


6

Introduction: Questioning ‘Globalization’

a malign and destructive force. Free markets, it is argued, inevitably create
inequalities. By extension, the globalization of markets increases the scale and
extent of such inequalities. Unregulated markets inevitably lead to a reduction
in well-being for all but a small minority in the world, as well as creating massive
environmental problems. Markets, therefore, must be regulated in the wider
interest. To some anti-globalists, in fact, the only logical solution is a complete
rejection of globalization processes and a return to the ‘local’.

‘Sceptical internationalists’
Although the notion of a globalized economic world has become widely accepted,
some adopt a more sceptical position, arguing that the ‘newness’ of the current situation has been grossly exaggerated. The world economy, it is claimed, was actually
more open and more integrated in the half century prior to the First World War
(1870–1913) than it is today.11 The empirical evidence used to justify this position is
quantitative and aggregative, based on national states as statistical units. Such data reveal
a world in which trade, investment and, especially, population migration flowed in
increasingly large volumes between countries. Indeed, such levels of international
trade and investment were not reached again (after the world depression of the 1930s
and the Second World War) until the later decades of the twentieth century. Indeed,
international population migration has not returned to those earlier levels, at least in
terms of the proportion of the world population involved in cross-border movement.
On the basis of such quantitative evidence Hirst and Thompson assert that ‘we do
not have a fully globalized economy, we do have an international economy’.12

Grounding ‘globalization’: geography really
does matter
Such national-level quantitative data need to be taken seriously. But they are only
part of the story. They do not tell us what kinds of qualitative changes have been
occurring in the global economy. Most important have been the transformations in
the where and the how of the material production, distribution and consumption of
goods and services (including, in particular, finance). Old geographies of production,
distribution and consumption are continuously being disrupted; new geographies of
production, distribution and consumption are continuously being created.There has
been a huge transformation in the nature and the degree of interconnection in the
world economy and, especially, in the speed with which such connectivity occurs,
involving both a stretching and an intensification of economic relationships. Without
doubt, the world economy is a qualitatively different place from that of only 60 or
70 years ago, although it is not so much more open as increasingly interconnected in
rather different ways.


Introduction: Questioning ‘Globalization’

International economic integration before 1914 – and even until only about four
or five decades ago – was essentially shallow integration, manifested largely through
arm’s-length trade in goods and services between independent firms and through
international movements of portfolio capital and relatively simple direct investment.
Today, we live in a world in which deep integration, organized primarily within and
between geographically extensive and complex global production networks, and
through a variety of mechanisms, is increasingly the norm.
Such qualitative changes are simply not captured in aggregative trade and investment data of the kind used by the sceptics. For example, in the case of international
trade, what matters are not so much changes in volume – although these are certainly important – as changes in composition. There has been a huge increase in both
intra-industry and intra-firm trade, both of which are clear indicators of more functionally fragmented and geographically dispersed production processes.13 Above all,
there have been dramatic changes in the operation of financial markets, with money
moving electronically round the world at unprecedented speeds, generating enormous
repercussions for national and local economies.
The crucial diagnostic characteristic of a ‘global economy’, therefore, is the
qualitative transformation of economic relationships across geographical space and not
their mere quantitative geographical spread. This involves ‘not a single, unified
phenomenon, but a syndrome of processes and activities’.14 There is not a single
‘driver’ of such transformative processes – certainly not the technological
determinism so central in much of the popular globalization literature. In other
words,
globalization is a … supercomplex series of multicentric, multiscalar, multitemporal, multiform and multicausal processes.15

Globalizing processes are reflected in, and influenced by, multiple geographies, rather
than a single global geography: the ‘local and the global intermesh, running into one
another in all manner of ways’.16 Although there are undoubtedly globalizing forces
at work, we do not have a fully globalized world. In fact, as Figure 1.2 shows, several
tendencies can be identified, reflecting different combinations of geographical
spread and functional integration or interconnection rather than the unidirectional
trajectory shown in Figure 1.1:
x localizing processes: geographically concentrated economic activities with varying degrees of functional integration
x internationalizing processes: simple geographical spread of economic activities
across national boundaries with low levels of functional integration
x globalizing processes: both extensive geographical spread and also a high degree
of functional integration
x regionalizing processes: the operation of ‘globalizing’ processes at a more geographically limited (but supranational) scale, ranging from the highly integrated and
expanding European Union to much smaller regional economic agreements.

7


Introduction: Questioning ‘Globalization’

8

High

s

processes

R

pr

oc

es

se

R

R

g

Localizing

R

gi

on

al

iz

in

R

Re

Degree of functional integration of economic activities

‘Pure
globalization’

pr
R

G

b
lo

al

iz

e
oc

ss

es

g
in

Internationalizing

processes

Low

High
Extent of geographical spread of economic activities

Figure 1.2

Processes and scales of global economic transformation

Globalization, therefore, is not an inevitable end-state but, rather, a complex,
indeterminate set of processes operating very unevenly in both time and space. As
a result of these processes, the nature and the degree of interconnection between
different parts of the world is continuously in flux. A major task, therefore, is to
challenge some of the more egregious globalization myths:
x
x
x
x
x

The world is not flat (contra Friedman).
The world is not borderless (contra Ohmae).
Global corporations do not rule the world (contra Korten).
Globalization is not always good (contra the neo-liberal hyper-globalizers).
Globalization is not always bad (contra the anti-globalizers).

In questioning globalization, therefore, we need to get real: to develop a firmly
grounded understanding of both the processes involved and their impacts on people’s
lives. Of course, there will always be differences of diagnosis, prognosis and recommended treatment. But at least these should be based on sound conceptual and
empirical analysis. This book represents an attempt to do this.


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