240095 SE VM2 / VM1 - Global Production Networks (2018W)

The global economy has changed significantly in the past decades in the context of globalization. This change has a quantitative dimension, as reflected in the rise in international finance, global trade and foreign direct investment. But there has also been a qualitative change in the structure of global production and the organization of global industries. Today, the global economy is increasingly structured around organizationally fragmented and geographically dispersed “global production networks” where transnational corporations break up the production process in different parts and locate them on a global scale in search of low-cost and capable suppliers. Such global production arrangements can be found in sectors as diverse as apparel, footwear, automobiles, electronics, fruits and vegetables, flowers, coffee, cocoa, minerals, tourism and business related services.

These transformations in global production have crucial implications on how firms, producers and workers in the Global South are integrated into the global economy. The extension of global production networks and the “offshoring” and “outsourcing” in the Global North have provided opportunities for firms and producers in the Global South to enter and upgrade in the global economy. However, integration into global production networks can also lock firms and countries in low value added activities relying on static competitive advantages in terms of low production (often labor) costs without long lasting benefits for learning and development. The wider social impacts of such integration are often very problematic.

These outcomes are closely related to asymmetric market and power structures embodied within global production networks. “Lead firms” in global production networks outsource “commodity-like” activities where competition is high and prices low while they retain control over intangible, high value activities where entry barriers and rents are high. Power structures within global production networks are however contingent and contested. This is reflected in the emergence of powerful supplier firms and lead firms in the Global South in some sectors and countries that have challenged at least to a certain extent the power of traditional Global North-based lead firms.

In this context, this seminar asks broadly if these transformations in the global economy and particularly the proliferation of global production networks have provided “upgrading opportunities” or have intensified “unequal exchange” for suppliers in the Global South. This question is addressed in three steps. First, key changes in global production are assessed, concentrating on how globalized production arrangements have evolved in the past decades. Second, the key conceptual approaches to analyze these changes, their socioeconomic consequences and particularly implications for supplier countries/regions, firms, producers and workers are critically examined. Third, specific globalized production networks in terms of sector and country case studies are comparatively analyzed focusing on the concepts of “upgrading” and “unequal exchange” in manufacturing and agriculture-based sectors.

The first half of the course will generally start with an input by the lecturer followed by a discussion based on approximately two required readings. The lectures in the second half of the course will focus on specific global production networks and will involve a seminar paper presentation by a group of students. Students are required to read and prepare the readings for each lecture in advance to allow for an interactive discussion.