Socscie 1 top 2

• The global economic system, beginning in 1896, had reached its peak in 1914.
• not all parts of the world gain from the growth of the global economy
• poor nations and the peoples who inhabit them were and are subjugated by the operations of the global economy
• two global economic giants – the US and China
• the US, by the end of November 2007, had a trade deficit of $701.6 billion (it ended the year at $738.6 billion).
• deficit dropped slightly in 2008 and dramatically in 2009 to about half the 2007 figure because of

  the Great Recession. (United States)
• China announced that it had a record trade

  surplus of $177.47 billion in 2006
• China’s surplus was 75% greater than it had

  been in the previous year (2005)
• In November 2006, the Chinese surplus

  with the US was almost equal to its surplus with all other countries in the world.
• The US deficit with China alone was $22.9 billion and that was just for the month of November 2006.
• The US has a larger deficit with China than with any other country in the world.
• Gary Gereffi has outlined several of the most important economic chains and networks

  involved in global trade:

  1. Supply chains
  2. international production networks
  3. global commodity chains
  4. global value chains
• These are general label for value-adding activities in the production process

  supply chains
• supply chains begins with raw materials and follows the value-adding process through a variety of inputs and outputs and ultimately to a finished product.
• These involve the networks of producers involved in the process of producing a finished product

  International production networks
• Gereffi and Korzeniewicz bring together the idea

  of value-adding chains and the global organization of industries.
• Also included here are “brand companies”

  or “manufacturers without factories”.

  Global commodity chains
• Gereffi argues that global value chains are emerging as the overarching label for all work in this area and for all such chains.
• about two-thirds of the steel made in the US comes from recycled steel rather than from iron ore

  and coke
• One of the richest women in the world is Zhang Yin (estimated to be worth $1.5 billion and her family has worth billions more). The source of her wealth is her

  business, Nine Dragons Paper (72% of which is controlled by the Zhang family) and

  Los Angeles-based America Chung Nam (the largest exporter to China)
• The global value chain here involves, cotton grown in and shipped from the US; T-shirts manufactured in China; the shipping to and sale in, the US of those new T-shirts; the eventual disposal of them; and finally the shipping and sale of those used T-shirts in Africa.


  T shirt
• We can begin with cotton production in Texas.
• The global value chain for the Apple iPhone is fascinating. The story started with the mystery that while 3.7 million iPhones were sold in 2007, only 2.3 million were registered on the wireless networks that are Apple’s exclusive partners in the US and Europe.
• The loss of royalty income to Apple over the three

  succeeding years was expected to approach $1 billion
• The prices of many commodities reached high record in 2008, before dropping off quite dramatically as the Great Recession gained momentum
• China is in the process of positioning itself for the post-recession years by investing in commodities of all sorts. In February 2009, it invested $41 billion in oil companies in Brazil, Russia and Venezuela and over $20 billion in aluminum and zinc companies in Australia. China has huge cash reserves from the

  boom that ended in late 2007
• Outsourcing is the transfer of activities once performed by an entity to a business or businesses in exchange for money
• It is a complex phenomenon that is not restricted to the economy, not only a macro-level phenomenon, and not simply global in character.

  Outsourcing
• The form of outsourcing most closely and importantly associated with globalization is offshore outsourcing which involves sending work to companies in other countries.
• In-sourcing involves the fact that offshore outsourcing necessarily involves tasks being taken in by firms in other countries.
• Consumption is highly complex, involving mainly consumer objects, consumers, the consumption process and consumption sites.
• consumption sites, goods and the like have

  become both ubiquitous and increasingly dominated by neoliberalism
• Much of consumption revolves around shopping for and purchasing objects of all kinds, but in the recent years, an increasing amount of consumption relates to various services
• American and Western-style consumption sites have spread throughout much of the world.
• The global spread of chain stores, theme parks and among others, has led to many concerns and to resistance in many parts of the world.
• One of the famous works that captures the socio-historical and economic nexus of pre-capitalist economies and the present world was that of Immanuel Wallerstein’s research on the modern world-system
• His analysis focused on the broad economic entity with a division of labor that is not circumscribed by political or cultural boundaries.

  Immanuel wallerstein
• world-system is a largely self-contained system with a set of boundaries and a definable life span; that is, it does not last forever
• modern world-system is also known as the modern capitalist world-economy.
• It is a system which relies on economic denomination. It encompasses much state and a built-in process of economic stabilization.

  Modern world system