GE4202: REMAKING THE GLOBAL ECONOMY

 

1 August 2007

 

Lecturer:        Professor Henry Yeung

                        (Room: AS2 03-04; Tel: 6874 6810; E-mail: HenryYeung@nus.edu.sg)

                        Homepage: http://courses.nus.edu.sg/course/geoywc/henry.htm

 

Venue:           Honours Room

 

Time:             Tuesday 9:30 a.m. – 12:30 p.m.

 

Seminars cancelled: Tuesday 28 August 2007; 6 November 2007

 

AIMS

 

*To develop an in-depth understanding of the key actors driving contemporary global economic change – transnational corporations and nation-states.

To provide an advance foundation for students planning to take up careers or postgraduate courses in international business, regional and global studies and economic geography.

 

OBJECTIVES

 

By the end of the module, students should have a sound understanding of:

 

The processes and development of transnational activities by modern corporations;

 The complex relationships that exist between transnational corporations on the one hand and other institutions (e.g. nation states and national firms) on the other as both seek to enhance their positions in a highly competitive and volatile global economy;

 The ways through which transnational corporations respond to pressures of global economic restructuring and

 The economic, social and political implications of transnational corporation activities (and transnational production chains) in specific national, regional and local contexts.

 

MODULE DESCRIPTION

 

This module examines the interrelationships between transnational corporations (TNCs) and regional development in an era of global economic change. The knowledge of TNCs and their cross-border operations is indispensable to any serious attempt to understand the dynamics of the global space-economy. In the Asia-Pacific rim, TNCs are major economic agents spearheading economic development and social change at both national and regional levels. TNCs also play a prominent role in different spheres (production, consumption and exchange) and sectors (primary, secondary and tertiary) of any regional economy. The module seeks to achieve a mixed blend of theory and practice of TNCs and regional development. It provides students with not only description and explanation of TNC operations, but also practical knowledge in the analyzing the impact of TNCs on regional development. In addition to regular readings, students are expected to conduct specific case studies on the role of TNCs in regional development.

 

LECTURE AND SEMINAR PROGRAMME

 

The module comprises 11 three-hour seminars during each Tuesday morning from Tuesday 14 August 2007 onwards.  With the exception of the first and last two classes, each session will comprise a one-hour introductory lecture, a one-hour seminar presentation on a pre-arranged topic by selected members of the class, and a one-hour group discussion.

 

The following is a list of lecture topics and assigned readings for the class presentation.  Each student will take responsibility for preparing a research paper (2,000 - 3,000 words) and presenting it at the end of the module. All students are also expected to study the readings in advance of the class and present on one assigned seminar topic. A list of readings is also given.

 

ASSESSMENT

 

The final mark will be derived from module work (50%) and an end-of-semester examination (50%).  The module work will comprise:

 

1. Participation in seminar discussions (10%)

 

2. One seminar presentation (10%) and

 

3. One research paper to be presented during and handed in after Lecture 10 (30%). You are required to complete a 3,000-word case study on “The global production/business networks of any major transnational corporation from China, Hong Kong, Taiwan, South Korea, and Malaysia” of your own choice.

 

     Please note that the paper should consist of a descriptive profile of the global operations by any major TNC of your own choice. The TNC must have significant operations in North America and/or Western Europe, apart from its home-based operations in Asia. It should show how the investment strategies of the TNC have evolved over time and how the TNC’s global operations are organized.

 

     You are required to explain and to assess the geographical organization of the global production/business network of your chosen TNC by applying concepts and theories from this module.

 

     The paper should not be merely a “company history” written as an isolated case study, but should rather be set firmly within the broader context of global competition.

 

     Please inform me your choice of TNCs by Tuesday 25 September 2007. No two persons are allowed to write on the same TNCs. So book it as soon as possible with me. The deadline for submission is Sunday 11 November 2007.

 

COURSE OUTLINE

 

    Introduction: changing global map of transnational corporations and foreign direct investment (14 August 2007)

 

    Competing theoretical perspectives on TNCs and regional development (21 August and 4 September 2007)

 

    Strategies of TNCs in global competition (11 September 2007)

 

    The internationalization of nation states (18 September 2007)

 

    The political economy of triangular diplomacy: TNC-state relationship (2 October 2007)

 

    Gaining national competitive advantage: the globalization of Asian TNCs (9 October 2007)

 

    TNCs and states in local and regional development (16 October and 23 October 2007)

 

    Presentation of research papers (30 October 2007)

 

    Conclusion (13 November 2007)

 

Context of the Module: Firms and States in Global Competition

 

A tendency since the late 1980s and the early 1990s in international business and political economy has been the growing interdependence between the state and the transnational corporation (TNC). This growing interdependence has been defined as “the rivalry between states and the rivalry between firms for a secure place in the world economy” (Stopford and Strange, 1991: 1). The relation between the state and the firm is no longer a one-way process. It has grown into triangular relationships and diplomacy along the state-TNC nexus: (1) state-state; (2) state-TNC and (3) TNC-TNC. The increasingly complex relationships between the state and the TNC have prompted many host governments to reconsider their concerns when negotiating with TNCs. The concern of governments varies with the type of TNCs with which they are negotiating. In general, there are two trends that draw growing attention from government authorities. The first trend is increasing global interdependence: Governments are particularly concerned whether they will lose their competitiveness and power in the interdependent global economy. Their main concerns are namely (1) the equity and efficiency of adjustment processes in declining industries; (2) the development of new industries for strategic reasons; and (3) the specialization of national economies.

 

In today's interdependent global economy, the fate and prospect of industries in one country or region is often intertwined with industries in another country or region. Technological development in advanced industrialized economies, for example, has reduced the need for primary products in the production processes. This results in the decline of traditional industries such as mining and plantations in many Southeast Asian countries. Many of these Southeast Asian countries have since learnt to adjust to this process of global shift in production processes and consumption patterns. Their main concern is to remain competitive in the global economy and, yet, to capture value-added activities mainly through the local presence of foreign investments. Malaysia and Thailand are good examples as reform-minded governments have been consciously attracting foreign investors and TNCs, particularly those in electronics sector, to pull the economy out of declining industries. Another concern for many natural resources-poor countries is to develop new industries for strategic reasons. To capture greater value-added activities and to share the success of the global economy, many countries begin to develop strategic plans for their industrialization processes. Singapore is well known for its consistent drive towards high-tech and information-intensive industrialization. Today, the clustering of many leading world-class electronics, chemicals, and biomedical science manufacturers and their research and development facilities in the city-state testifies the success of such a strategy in attracting TNCs. A final concern of governments is related to specialization and hence trade. Countries in the Asia-Pacific region, in particular those newly industrialized economies (NIEs), have long realized that import-substitution is not an ultimate solution to economic underdevelopment. They instead have relied on export-oriented platform to economic growth and development. To be a successful export-oriented economy, one must specialize in order to capture comparative advantages that maximize the skill and resource endowments of a particular country. Singapore, for instance, offers a strong comparative advantage in human resources, whereas natural resources sustain the comparative advantage of Indonesia. Both countries specialize in different industries to gain from international trade and, more recently, foreign direct investment.

 

On the other hand, governments are also driven by the second structural trend – growing global competition. Their response varies according to the nature of TNCs. If they are concerned with global competition without the presence of TNCs, the tendency is to regulate the extent and speed of exposing national producers and markets to international competition (e.g. Taiwan and South Korea). If multi-domestic TNCs are preferred and discrete subsidiaries are maintained by these TNCs, a minimum regulation is enforced (e.g. Singapore). Sometimes, host country governments are overpowered by global TNCs having worldwide operations. Integrated TNCs are likely to have substantial bargaining power so that there is a transition from regulation to negotiation in the attitude of government authorities.

 

This course is structured to reflect these dynamic trends and strategies in the global economy.

 

     First, it focuses on the internationalization of firms and states and their strategies in global competition.

 

     Second, it examines the works of nation states in promoting a more congenial relationships with TNCs and in gaining sustainable national competitive advantages.

 

     Third, it discusses local/regional development initiatives and the role of TNCs in regional development.

 

Standard Texts

 

Each of you is expected to have read and be familiar with the following texts. They are essential to the course and the examination.

 

Dicken, Peter (2007), Global Shift: Mapping the Changing Contours of the World Economy, Fifth Edition, London: Sage.

 

Peck, Jamie and Yeung, Henry Wai-chung (eds.) (2003), Remaking the Global Economy: Economic-Geographical Perspectives, London: Sage.

 

The following websites contain very useful information to this module:

 

1. United Nations Conference on Trade and Development: data on TNCs and FDI (http://www.unctad.org)

 

2. Organisation for Economic Cooperation and Development: data on various economies

 

3. APEC Investment Mart

 

4. Global Production Networks Project Website: http://www.art.man.ac.uk/Geog/gpn

 

 

DETAIL LECTURE OUTLINE

 

Lecture 1. Introduction: changing global map of transnational corporations and foreign direct investment (14 August 2007)

 

* Dicken, Peter (2007), Global Shift, Chapters 1-2.

 

United Nations Conference on Trade and Development (2006), World Investment Report 2006: FDI from Developing and Transition Economies: Implications for Development, New York: United Nations, Chapters 1-2. Website: http://www.unctad.org/wir (WIR 2007 is due in October 2007).

 

Lectures 2-3. Competing theoretical perspectives on TNCs and regional development

(21 August and 4 September 2007)

 

* Dicken, Peter (2007), Global Shift, Chapters 3-5.

 

* Dunning, John H. (2006), ‘Towards a new paradigm of development: implication for the determinants of international business activity’, Transnational Corporations, Vol.15(1), pp.173-227.

 

* Yeung, Henry Wai-chung (ed.) (2007), Handbook of Research on Asian Business, Cheltenham: Edward Elgar, Chapters 2-3 by Delios et al. and Peng.

 

* Gereffi, Gary (2005), ‘The global economy: organization, governance, and development’, in Neil J. Smelser and Richard Swedberg (eds.), The Handbook of Economic Sociology, 2nd ed.  Princeton, NJ: Princeton University Press, pp.160-82.

 

* Henderson, Jeffrey, Dicken, Peter, Hess, Martin, Coe, Neil and Yeung, Henry Wai-chung (2002), ‘Global production networks and the analysis of economic development’, Review of International Political Economy, Vol.9(3), pp.436-64.

 

Buckley, Peter J. and Ghauri, Pervez (2004), ‘Globalisation, economic geography and the strategy of multinational enterprises’, Journal of International Business Studies, Vol.35(2), pp.81-98.

 

Dicken, Peter, Kelly, Philip, Olds, Kris and Yeung, Henry Wai-chung (2001), ‘Chains and networks, territories and scales: towards an analytical framework for the global economy’, Global Networks, Vol.1(2), pp.89-112.

 

Gereffi, Gary, Humphrey, John and Sturgeon, Timothy (2005), ‘The governance of global value chains’, Review of International Political Economy, Vol.12(1), pp.78-104.

 

Hess, Martin and Yeung, Henry Wai-chung (2006), ‘Whither global production networks in economic geography? Past, present and future’, Environment and Planning A, Vol.38(7), pp.1193-1204.

 

Ietto-Gillies, Grazia  (2005), Transnational Corporations and International Production: Concepts, Theories and Effects, Cheltenham: Edward Elgar.

 

Ricart, Joan Enric, Enright, Michael J., Ghemawat, Pankaj, Hart, Stuart L. and Khanna, Tarun (2004), ‘New frontiers in international strategy’, Journal of International Business Studies, Vol.35(3), pp.175-200.

 

Rugman, Alan and Verbeke, Alain (2004), ‘A perspective on regional and global strategies of multinational enterprises’, Journal of International Business Studies, Vol.35(1), pp.3-18.

 

Lecture 4. Strategies of TNCs in global competition (11 September 2007)

 

Lecture:           What are the challenges facing TNCs in an era of global competition? What are their strategies to achieve a win-win situation? What are the geographical outcomes of such strategies?

 

Readings:         * Dicken, Peter (2007), Global Shift, Chapters 9-14.

 

                        * Coe, Neil M., Kelly, Philip F. and Yeung, Henry W.C. (2007), Economic Geography: A Contemporary Introduction, Oxford: Blackwell, Chapter 8.

 

                        Coe, Neil M. and Lee, Yong-Sook (2006), ‘The strategic localization of transnational retailers: the case of Samsung-Tesco in South Korea’, Economic Geography, Vol.82(1), pp.61-88.

 

                        Peck and Yeung (eds.) (2003), Remaking the Global Economy, Chapters by Gertler and Schoenberger.

 

                        Jansson, Hans (2007), International Business Strategy in Emerging Country Markets: The Institutional Network Approach, Cheltenham: Edward Elgar.

 

                        Mirza, Hafiz (ed.) (1998), Global Competitive Strategies in the New World Economy: Multilateralism, Regionalization and the Transnational Firm, Cheltenham: Edward Elgar, Chapters 2, 4, 10 and 20.

 

                        Pearce, Robert D. (2006), ‘Globalization and development: an international business strategy approach’, Transnational Corporations, Vol.15(1), pp.39-74.

 

Wang, Jason H.J. and Yeung, Henry Wai-chung (2000), 'Strategies for global competition: transnational chemical firms and Singapore’s chemical cluster', Environment and Planning A, Vol.32(5), pp.847-69.

 

Yeung, Henry Wai-chung, Poon, Jessie and Perry, Martin (2001), ‘Towards a regional strategy: the role of regional headquarters and regional offices in the Asia Pacific’, Urban Studies, Vol.38(1), pp.157-83.

 

Video: Multinational Enterprises and the End of Global Strategy (Australian Centre for International Business), Call No: HVC1500 (c. 2000 and 40 minutes)

 

Seminar topic: What is the nature of global competition and its impact on the strategies of transnational corporations?

 

Lecture 5. The internationalization of nation states (18 September 2007)

 

Lecture:           What are the pressures faced by nation states in today's globalized economy? How do they respond to these pressures? What are different forms and functions of nation states?

 

Readings:         * Dicken, Peter (2007), Global Shift, Chapters 6-7.

 

* Coe, Neil M., Kelly, Philip F. and Yeung, Henry W.C. (2007), Economic Geography: A Contemporary Introduction, Oxford: Blackwell, Chapter 7.

 

                        Peck and Yeung (eds.) (2003), Remaking the Global Economy, Chapters by Tickell and Peck, Brenner and Hudson.

 

                        Jones, Martin R. and Jones, Rhys (2004), ‘Nation states, ideological power and globalisation: can geographers catch the boat?’. Geoforum, Vol.35(4), pp.409-24.

 

                        McGrew, Anthony G. (1998), 'The globalization debate: putting the advanced capitalist state in its place', Global Society, Vol.12(3), pp.299-321.

 

Gritsch, Maria (2005), ‘The nation-state and economic globalization: soft geo-politics and increased state autonomy’, Review of International Political Economy, Vol.12(1), pp.1-25.

 

                        Peet, Richard (2007), Geographies of Power: Making Global Economy Policy, London: Zed Books.

 

Seminar topic: Critically evaluate the role of nation states in governing today's world economy.

 

Lecture 6. The political economy of triangular diplomacy: TNC-state relationship

(2 October 2007)

 

Lecture:           What is the relationship between firms and nation states in global competition? How do firms interact with nation states to gain competitive advantages over their rivals? How do nation states attract and/or help national firms to compete in the regional and global marketplace?

 

Readings:         * Dicken, Peter (2007), Global Shift, Chapter 8.

 

                        * Yeung, Henry Wai-chung (ed.) (2007), Handbook of Research on Asian Business, Cheltenham: Edward Elgar, Chapters 12-14 by Dent, Phelps, and Giroud.

 

Doremus, Paul N., Keller, William W., Pauly, Louis W. and Reich, Simon (1998), The Myth of the Global Corporation, Princeton, NJ: Princeton University Press.

 

Kobrin, Stephen J. (2001), ‘Sovereignty@bay: globalization, multinational enterprise, and the international political system’, in Alan M. Rugman and Thomas L. Brewer (eds.), Oxford Handbook of International Business, Oxford: Oxford University Press, pp.181-205.

 

                        Peck and Yeung (eds.) (2003), Remaking the Global Economy, Chapters by Dicken and Glasmeier and Conroy.

 

                        Phelps, Nicholas A. and Raines, Philip (eds.) (2003), The New Competition for Inward Investment: Companies, Institutions and Territorial Development, Cheltenham: Edward Elgar, Chapters 3-5, 10-11.

 

Seminar topic: Discuss the complex bargaining and embedded relationships between transnational corporations and nation states.

 

Lecture 7. Gaining national competitive advantage: the globalization of Asian TNCs

(9 October 2007)

 

Lecture:           What is the role of the state in creating and sustaining national competitive advantage? How do national firms develop in Asian newly industrialized Economies? What are the various forms of capitalist development in Asian NIEs?

 

Readings:         * Yeung, Henry Wai-chung (2007), ‘From followers to market leaders: Asian electronics firms in the global economy’, Asia Pacific Viewpoint, Vol.48(1), pp.1-25.

 

                        * United Nations Conference on Trade and Development (2006), World Investment Report 2006: FDI from Developing and Transition Economies: Implications for Development, New York: United Nations, Chapters 3-4.

 

Mathews, John A. (2002), Dragon Multinational: A New Model for Global Growth, Oxford: Oxford University Press.

 

Poon, Jessie, Hsu, Jinn-Yuh and Suh, Jeongwook (2006), ‘The geography of learning and knowledge acquisition among Asian latecomers’, Journal of Economic Geography, Vol.6, pp.541-59.

 

                        Sim, A.B. and Pandian, J. Rajendran (2003), ‘Emerging Asian MNEs and their internationalization strategies – case study evidence on Taiwanese and Singaporean firms’, Asia Pacific Journal of Management, Vol.20(1), pp.27-50.

 

                        Yeung, Henry Wai-chung (ed.) (1999), The Globalisation of Business Firms from Emerging Economies, Volume 1, Cheltenham: Edward Elgar, Introduction.

 

                        Yeung, Henry Wai-chung (2002), Entrepreneurship and the Internationalisation of Asian Firms: An Institutional Perspective, Cheltenham: Edward Elgar, Chapter 3.

 

                        Yeung, Henry Wai-chung (ed.) (2007), Handbook of Research on Asian Business, Cheltenham: Edward Elgar, Chapters 20-22 by Tolentino, Pananond, and Wu.

 

Seminar topic: Explain the globalization of transnational corporations from Asian developing economies.

 

Lectures 8-9. TNCs and states in local and regional development (16 October and 23 October 2007)

 

Lecture:           What are the changing forms of firm activities in local and regional economic development? What is the role of TNCs in local and regional development in an era of globalization?

 

Readings:         * Dicken, Peter (2007), Global Shift, Chapters 15-18.

 

                        * Coe, Neil, Hess, Martin, Yeung, Henry Wai-chung, Dicken, Peter and Henderson, Jeffrey (2004), ‘”Globalizing” regional development: a global production networks perspective’, Transactions of the Institute of British Geographers, New Series, Vol.29(4), pp.468-84.

 

                        * United Nations Conference on Trade and Development (2006), World Investment Report 2006: FDI from Developing and Transition Economies: Implications for Development, New York: United Nations, Chapters 5-6.

 

                        Bhagwati, Jadesh (2007), ‘Why multinationals help reduce poverty’, The World Economy, Vol.30(2), pp.211-228.

 

                        Giroud, Axele (2003), Transnational Corporations, Technology and Economic Development: Backward Linkages and Knowledge Transfer in South-East Asia, Cheltenham: Edward Elgar, Chapters 3-4.

 

                        Liu, Weidong and Dicken, Peter (2006), ‘Transnational corporations and “obligated embeddedness”: foreign direct investment in China’s automobile Industry’, Environment and Planning A, Vol.38(7), pp.1229-247.

 

                        Phelps, Nicholas A. and Fuller, C. (2000), ‘Multinationals, intracorporate competition, and regional development’, Economic Geography, Vol.76(3), pp.224-43.

 

                        Tokatli, Nebahat (2007), ‘Asymmetrical power relations and upgrading among suppliers of global clothing brands: Hugo Boss in Turkey’, Journal of Economic Geography, Vol.7(1), pp.67-92.

 

                        Yeung, Godfrey (2001), Foreign Investment and Socio-Economic Development in China: The Case of Dongguan, Basingstoke: Palgrave.

 

                        * Yeung, Henry Wai-chung, Liu, Weidong and Dicken, Peter (2006), ‘Transnational corporations and network effects of a local manufacturing cluster in mobile telecommunications equipment in China’, World Development, Vol.34(3), pp.520-40.

 

                        Zhou, Yu and Tong, Xing (2003), ‘An innovative region in China: interaction between multinational corporations and local firms in a high-tech cluster in Beijing’, Economic Geography, Vol.79(2), pp.129-52.

 

Seminar topic 1: With reference to specific examples, discuss the spatial dimensions of TNC impact.

 

Seminar topic 2: With reference to specific examples, assess the relevance of TNCs for local and regional development.

 

Lecture 10. Presentation of research papers (30 October 2007)

 

Lecture 11. Conclusion (13 November 2007)

 

Readings:         * Dicken, Peter (2007), Global Shift, Chapter 19.

 

Dicken, Peter (2004) ‘Geographers and “globalization”: (yet) another missed boat?’, Transactions of the Institute of British Geographers, Vol.29(1), pp.5-26.

 

Video: Globalization (Debra Film for NBV Sweden), Call No: CVC13330 (c. 2002 and 28 minutes)