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To describe and analyze the role of global corporations in economic globalization
To explain the concept of flexible production systemsTo explain the concept of flexible production systems
To explain the concept of the New International Division of Labour (NIDL)
Colonial period ◦ Emphasis on primary productsEmphasis on primary products◦ Examples ‐ bananas, sugar, rubber plantations
1945 to 1970s◦ USA companies ‐ overseas manufacturing and branch factories ‐ Puerto Rico
◦ post‐war reconstruction – Europe
1970s to present1970s to present ◦ Cheap labour and Newly Industrialized Countries (NICs)
Horizontal integration
Vertical integrationVertical integration
Diagonal integrationg g
Joint ventures and strategic alliances
Foreign Direct Investment (FDI)◦ Overseas investment in production or service provision, usually by multinationals
How do TNCs gain access to other countries?◦ Divestments ‐ buying state corporations (privatisation)◦ Acquiring or merging with local companies◦ Acquiring or merging with local companies◦ Establishing branch factories◦ Purchasing equity in local companies
Traditional concept of “the division of labour”
Old International Division of Labour◦ colonial trading systems and theory of comparative advantage◦ periphery supplied raw materials and agricultural plantation products to industrial core countries
◦ High value manufactured good exchanged between core countries, some were exported back to developing countries
New International Division of Labour (1960s onwards)◦ Decentralization of manufacturing from industrial core countries to NICs, articulated by MNCs
◦ Relative decline of U.S.A. as a manufacturing power◦ New economic specializations in industrial core countries
D. MacKinnon & A. Cumbers (2007) An Introduction to Economic Geography: Globalization Uneven Development and Place ch 7 ‘TheGeography: Globalization, Uneven Development and Place, ch. 7 ‘The changing geographies of the multinational corporation’, pp143‐166.
P tt t l (2004) G hi f D l t h 4Potter et al. (2004) Geographies of Development, ch. 4
P. Dicken (2003) Global Shift: transforming the world economy,
P.L. Knox, J. Agnew & L. McCarthy (2003) The Geography of the World Economy, ch. 6 and section ch.3