Explaining Late 20th C Changes in the Global Economy

International Trade Theory Comparative advantage industries vary in factor intensities countries vary in factor endowments country should specialize in??? weaknesses?

Classical Location Theory Impacts of variations in production costs, especially transportation role of other factors like labor and energy weaknesses--difficult to apply to multilocational, multinational TNC

Dicken’s Four Broad Processes underlying internationalization & globalization Technological change strategies of states strategies of firms, especially TNCs interactions between firms and states

Technology An enabling agent of change/not THE CAUSE a social process--humans CHOOSE to adopt particular technologies choices are sensitive to distribution of power and wealth key impacts are often UNANTICIPATED

Building Blocks of Dicken’s Discussion Broad types of technological change technologies of transportation and communications technological change in products and production processes processes underlying the localization of technological innovation

Types of technological change Incremental innovations Changes in the techno-economic paradigm (revolutionary) concept of hierarchy of types

Long or K-waves Roughly 50 year long cycles of economic expansion and contraction four phases –prosperity/recession/depression/ recovery recovery and prosperity is fueled by new technologies and investment opportunities

Kondratiev Long Waves Innovations in information technology as keys to fifth K-wave.

Technologies of transportation and communications Key concepts: friction of distance and time-space convergence unevenness of application

Communications innovations Satellite technology (1965) optical fiber cables developments in the electronic media--create global markets, firms mass-user computer-based communication systems –electronic mail and WWW

Impacts of these transportation/ communications innovations Facilitate internationalization and globalization of production make other cost factors (like labor) relatively more important promote concentration of production

Concept of scale economies

Impacts of serving a larger market

Impact of transportation improvement

Product and Process Innovations The Product Life-Cycle Perspective change in production process implies change in factor proportions implies change in attractiveness of different locations Thurow’s critique

Process Innovations: the K-wave perspective Stages of evolution in the organization of production –manufacture –machinofacture –scientific management –Fordism –post-Fordism

FORDISM Very large scale production units assembly line techniques unskilled labor standardized products for mass consumption

Features of the emerging organizational paradigm (post-Fordist) Flexible manufacturing systems permitted by technology prompted by shifts in consumer tastes Toyota and Honda examples implications

The PRODUCTION of new technology Strong spatial clustering why???

READING Dicken, chapters 3 and 4. –“The state is dead... Long live the state.” –“National variations in policy stance.”