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10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

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Page 1: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch
Page 2: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

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)

Page 3: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

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)

Page 4: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

Horizontal integration

Vertical integrationVertical integration

Diagonal integrationg g

Joint ventures and strategic alliances

Page 5: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

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

Page 6: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

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

Page 7: 10Globalization and transnational corporations ·  · 2010-02-23economic globalization ... An Introduction to Economic Geography: Globalization, Uneven Development and Place, ch

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