DSA2016: Politics in Development
The globalization of production is one of the dominant facts of our times. Yet, discussions about its implications for development have been theoretically limited and separated by disciplinary boundaries. This panel seeks to address these limitations through interdisciplinary collaboration.
The globalization of production has captured the attention of business scholars and economists, sociologists and geographers. From their respective disciplines, scholars have sought to harness the nature of this phenomenon by identifying new patterns of global distribution of value, typifying emerging forms of geographically disintegrated industrial organization, characterizing the concentration of global production into oligopolies and highlighting the social impacts of these processes.
Yet, when it comes to drawing conclusions about the implications of productive globalization for development, the existing literature suffers from two critical and intertwined drawbacks: insufficient theoretical reflection and limited dialogue across disciplines. Consequently, discussions that tie together 'development' and 'productive globalization' are increasingly confined to technically-oriented explorations of strategies through which developing countries can enter 'global value chains' and gradually 'upgrade' into more profitable segments.
Our panel seeks to foster a richer debate on the interrelationship between productive globalization and development aimed at characterizing the underlying drivers of these processes and the links between their social, political and economic dimensions, in both, concrete and theoretical terms. To this end, we invite scholars from diverse fields to contribute to the discussion with case studies and theoretical reflections. We especially welcome efforts to draw insights from intellectual traditions that have sought to conceptualize the relationship between development and global production in the past, such as dependency theory and global political economy, as well as from fields that could shed new light on the phenomenon in our times, such as geopolitics and geoeconomics.
This panel is closed to new paper proposals.
Caloric unequal exchange in Latin America and the Caribbean
The paper shows the existence of a new form of unequal exchange between Latin America and the Caribbean and the rest of the world, coined as 'caloric unequal exchange'. LAC countries' terms of trade in terms of the cost of exported and imported calories of food products are deteriorating over time.
The existence of unequal exchange between rich and poor countries has been demonstrated in the literature for some time, explained by differences in labour costs reflected in the prices of traded goods. In recent years, research has also demonstrated that the lack of inclusion of environmental impacts in the prices of traded goods reflects an ecologically unequal exchange. This paper contributes to the discussion with the concept of caloric unequal exchange that reflects the deterioration of terms of trade for food in terms of calories. Using the latest FAO data available, exports and imports from and to Latin America and the Caribbean are analysed for the period 1961 through 2011 in volume, value and calories and for different groups of products. The conclusion is reached that although calories exported by the region to the rest of the world are more expensive that those imported, the ratio is deteriorating over time. This trend is found to be different depending on the partner involved. In all cases, the region is helping the rest of the world in improving their diets at a lower cost. This result confirms the loss of natural funds such as soil and nutrients, which can be seen as a de-capitalisation of exporting countries. A side result is that globalisation is homogenising diets over time, concentrating most of food consumption in a reduced number of products, and therefore increasing interdependency among countries and affecting food security.
Structural and geo-economic analysis of global value chains for productive transformation strategies
We present a working methodology for assessing the potential of different sectors within productive transformation strategies. The methodology aims to improve the effectiveness of industrial strategy by combining geopolitical variables and structural analysis of global value chains.
Productive transformation strategy (a.k.a. industrial policy) is often maligned for 'picking winners' that don't always win. However, while fostering the development of specific industries always carries with it the risk of failure, it is also an indispensable task for countries with an insufficiently strong manufacturing sector. The question is not whether or not the state should 'pick winners', but how to ensure that the approach used to prioritize industries, analyze their potential and strategize their success is as thorough and rigorous as possible. It is from this perspective that we seek to construct a methodology that can serve as a foundation for the design effective industrial strategies in the context of the globalization of production.
Since this is a project that cannot be developed in abstract terms, our efforts have been applied to the case of Ecuador. In this first stage, we use our working methodology to analyze some of the sectors prioritized in Ecuador's 'strategy for productive transformation through government procurement.' We combine structural microeconomic and macroeconomic analysis with geopolitical variables. In other words, we seek to analyze potential prioritized sectors going beyond considerations such as trade complementarity and elasticities to introduce variables like the long-term strategies of global firms and the conflicts between global powers for the definition of standards and other regulatory mechanisms that shape the geography of trade in the long-run.
Global Value Chains and the Middle Income Trap
GVC can accelerate development. Yet this development can create glass ceilings at different per capita income levels. Supply and demand factors can play a role for this. This paper analyzed the middle income trap and effects of GVC on it as well as policy recommendation for escaping from the trap.
The second unbundling form the 1980s onward due to revolution in communication and transport industry as well as globalization and neoliberal policies added to industrialization of developing countries. Yet being part of MNCs's global value chain (GVC) did for only a very small number of countries, for example South Korea or Taiwan, a catching up with high-income courtiers. Supply as well as demand factors can play a role for a lack of development.
Outsourcing low value-adding production stages to developing countries for cost reduction motives became the main feature of the second unbundling and changed the structure of global trade in a very radical way. Neoliberal policies, the revolution in information technology and reductions in transportation costs encouraged MNCs to outsource their fabrication stages to developing countries and focus more on their core competencies (the upstream and downstream end of value chains) that also create the highest value-added through value chain.
MNCs have the full control over GVC and market power in monopsonistic markets. This constellation can prevent climbing up further the technological and skill ladder of development. In this paper the first focus is the analysis of the relation between leading firms and local firms in developing countries via GVC. It is asked whether this relation leads to industrial upgrading of local firms or it sets a ceiling for further development. A second focus is the too high income inequality in the typical developing country which causes negative supply and demand effects which also slow down economic dynamic.
Recruitment in Global Supply Chains - A Source of Economic Betterment or Degradation?
This paper explores i) why participating in globalized fields of production does not necessarily lead to a reduction in poverty; ii) the challenges to regulating recruitment in supply chains; and, iii) advantages and disadvantages of a joint liability approach to regulating recruitment.
Today globalized fields of production are characterized by supply chains operating across borders. Supply chains are a system of organizations, people, activities, information, and resources involved in moving a product or service from the supplier to the customer. Global supply chains have been linked to the processes of employment degradation and forced labour (James, Walters, Sampson, Wadsworth, 2015; Locke, Amengual, Mangla, 2009; Andrees and Vuong, 2011). This is because larger firms use their superior market power to negotiate financially beneficial supply arrangements (Wright and Lund, 2013; James and Lloyd, 2008; Cunningham et al., 2013). Today, production is organised through multiple (global) supply chains and networks whereby firms tend to subcontract their production to firms that in turn rely on workers supplied by labour market intermediaries (LMIs) to produce / provide the requested products / services. This continuous elongation of supply chains renders the regulation of recruitment difficult whereby forced labour can more easily flourish. Simultaneously, taking up employment in globalized fields of production supposedly is a remedy to poverty (Phillips, 2011; Hickey, 2007; Du Toit, 2004; Hickey, 2013). This paper investigates in a first part why participating in globalized fields of production does not necessarily lead to a reduction in poverty but may indeed exacerbate these economic differences by focusing on employment conditions by LMIs. The second part addresses the challenges to regulating recruitment in global supply chains. The third part presents the argument for and disadvantages of a joint liability approach to regulating recruitment in supply chains.
The Impacts of Globalization on Rural Poverty
The impact of globalisation on rural poverty and development is an important topic, as most of the world’s poor reside in rural areas. As argued by Bardhan (2005), the net impact on poverty is complex and context-dependent, and therefore, empirical evidence needs to be assessed to analyse the effects.
The impact of globalisation on the poor is an area of serious concern, and has elevated both academic and practical debates. This paper aims to discuss these effects of the phenomenon with a particular focus on the rural poor in developing countries. Globalisation is a broad concept with various dimensions. For this paper, only the economic aspect has been considered, mainly emphasising on trade liberalization. The paper argues that both positive and negative outcomes of globalisation have been witnessed. The extent to which the rural poor are able to benefit or be negatively affected, depends largely on the local context, including patterns of society, access to resources, the state of infrastructure and the government's policies. An attempt is made to define the term globalisation and discuss a few perspectives on the issue and its understanding. The paper then presents and analyses the positive and negative effects of globalisation using theoretical arguments, supported by empirical evidence from various countries around the world. It concludes by outlining some conditions under which globalisation could be a means for poverty reduction and improving the welfare of the rural poor.
This panel is closed to new paper proposals.