GEOGRAPHY 4 Globalization: Regional Development and the World Economy

Main

Periphery Importance in World Economy

1700 - 1940

Three Sided Trading System
-raw materials from periphery exported to Europe/USA
-manufactured goods from Europe/USA exported to UK
-manufactured goods from UK exported to periphery

Large countries with political independence pursued import substitution policies

Economic Realignment and Geographical Polarization

1750 - 1970

Three zones emergent between 15th and 19th centuries: core, semi-periphery and periphery

Decline in manufacturing in colonized/dominating countries

Investment in Plantation Agriculture and Extraction of Industrial Raw Materials

Correlation between "burts" of colonization and Kondratieff downturns

Britain as the Linch Pin

1870 - 1930

Under the Gold Standard

Emergence of Organized Capitalism in the Core

1890 - 1960

Creating a repeating circle between production and consumption

Shift to Organized Capitalism

1890 - 1900

To defuse class hostility, to stimulate profits and in turn economic growth, try and flatten the business cycle, economies of scale mixed with regulation/mediation, encourage consumption

Rise of the Welfare State (Intense in 1930s)***

1900 - 2012

Healthcare provided by the govt or the employer, state pensions, underemployment benefits, retraining of workers, mass public education

US Assembly Line Production Established by Ford

1907

Taylorism= created efficiency within factories by dividing the work into separate tasks (time efficiency relative to production output)

Fordism= Higher wages lead to higher consumption; increased wages leads to an incentive to sell more which leads to increased profits; cheaper products for mass production e.g. Model T

Increased levels of consumption to overcome profit squeeze

1910

Required increase in wages

Political Independence established for most of the colonial world***

1940 - 1970

***Latin America Independence came after 1820s

Declining rates of barter-terms-of-trade overtime for basic commodity exports

USA as the Linch Pin

1944 - 1971

Bretton Woods Agreement= a chance to create a stabilizing international currency and ensure monetary stability once and for all

Consequences for World Economy after Fall of Organized Capitalism

1970 - 2012

-Biggest Firms are now mainly multinational or transnational
-Taxes rise in order to shelter profits
-With the rise of China, the majority of the FDI is barely established between core countries
-Product Life Cycle Model and Relocation of Labor Intensive Production
-Massive share of trade today is within firms
-Global supply chains have components from multiple sites and assembly lines

Changing Nature and Location of Jobs

1970 - 2012

The Industrial Reorganization of the Core (changing from technology to labor and moving offshore--> global supply chains)

Capital Intensity in manufacturing increased and labor intensive jobs were off-shored (new technology is as important as globalization in reducing manufacturing jobs; fewer jobs is a result of new technology NOT globalization)

Rise of Dual structure in the service sector
(producer & financial FIRE and consumer services)

Rise of Financial Services Industry, Driver of economic growth

Increase in Part time, decrease in full time jobs
(manufacturing jobs decrease, manufacturing increase)
Jobs moved to BIG cities and agglomeration economies are grouped

EDIT Plantations changing to Agribusiness

1970 - 2012

Capitalization of Export Agriculture and Resource Extraction
Shifting from Import substitution to local export-oriented manufacturing
Growth of Global Supply chain manufacturing

Capital Intensive Agriculture in ______

Nixon abrogates Bretton Woods Agreement of 1944

1971

The fixed exchange rate was changed to a floating exchange rate for the US Dollar

Nixon wanted to make exports more competitive before the 72' Election

Beginning of Financialization of the World Economy

OPEC Oil Prices established

1973

Major factor in the world economy, second pike occurred in 79'

The US had supplied itself with gas before the 1960s