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An Economic Geography Approach to the World Economy
Transcript of An Economic Geography Approach to the World Economy
Foreign Direct Investment
Direct investment is an investment by one firm in another, with the intention of gaining a degree of control over that firm’s operations. Foreign direct investment, therefore, is
direct investment across national boundaries to buy a controlling investment in a domestic firm or to set up an affiliate
. It differs from portfolio investment, the situation in which firms purchase stocks/shares in other companies purely for financial reasons.
Week 2 - September 9, 2013
Geog221 / Anne Spencer
Also known as climatic determinism or geographical determinism, is the view that the physical environment, rather than social conditions, determines culture. The fundamental argument of the environmental determinists was that aspects of physical geography, particularly climate, influenced the psychological mind-set of individuals, which in turn defined the behavior and culture of the society that those individuals formed.
A process of economic integration on a global scale, creating increasingly close connections between people and firms located in different places. Manifested in terms of increased flows of goods, services, money, information and people across national and continental borders.
Is Globalization "new"?
Any good or service produced by human labor and offered as a product for general sale on the market. Commodities are consumed by people other than those who produce them and they are obtained through purchase.
"by 1914, there was hardly a village or town anywhere on the globe whose
prices were not influenced by distant foreign markets, whose infrastructure
was not financed by foreign capital, whose engineering, manufacturing, and
even business skills were not imported from abroad, or whose labour markets
were not influenced by the absence of those who had emigrated or by the
presence of strangers who had immigrated. The economic connections were
intimate. - O’Rourke and Williamson (1999: 2) (Quoted in Dicken)
[Look at Dicken's Global GDP/Trade flows charts for more perspective on this-- pp. 15, 17, 23 & 24.]
A broad perspective on economic life which analyzes the economy within its wider social and political context, focusing on production and the distribution of wealth between different sections of the population as well as the exchange of commodities through the market.
Simply put, adding a “political” approach to an economic approach means exploring the political and social origins and implications of production and distribution patterns. It means asking the questions, “
Who gets what?” and “why?
[cit. Ruth Wilson Gilmore]
The process by which particular objects, relationships and ideas are turned into goods and services that are bought by individual consumers through the market.
TRENDS IN THE GLOBAL ECONOMY
Based on Dicken Intro & Chapter 1
While trade (in manufactured goods) has increased dramatically since the post-WWII period, FDI growth has hugely outpaced the growth of trade. Financial deregulation (removing limits to where/how much investment capital can flow across borders) has been popular government policy in the high-GDP-per-capita countries (the "core") and through development policy (namely Structural Adjustment Policies from the World Bank and IMF) was "encouraged" in the rest of the world. Increased capital flows and less regulation has made for more economic volatility in the global economy, as speculative bubbles balloon and burst with both more frequency and with wider impact.
in high-GDP countries
The East Asian
Financial Crisis (1997-98)
The East Asian economic crisis is largely thought to be the first of the "new" breed of global economic crises, ushered in by growing integration in world financial markets.
With corporations, capital, and commodities moving more freely and quickly across national borders, former manufacturing towns in the U.S. and other high-GDP per capita countries are increasingly devoid of jobs and subsequently economic and social life.
In moving production offshore to low-GDP per capita countries, U.S. and multinational corporations take advantage of lax environmental and labor laws. Working conditions in these new manufacturing centers are often dismal, pay is very low, and benefits and job security are non-existant.
Conditions at Foxconn factories in China and Taiwan have gained mainstream media attention in recent years.
*note the horrifyingly condescending tone this report takes toward the "sweet," "hardworking" women who work in the factory.
*More on this in Week 3 w/ James Blaut. For a preview consider this question: what "work" does the myth of environmental determinism "do" and for whom? Why is a "natural" explanation for the divide between rich and poor places (and people) so convenient for some?
AN ECONOMIC GEOGRAPHY V. ECONOMICS APPROACH
General, "Law Like"
Does not emphasize SPACE or PLACE
Does not consider POWER, VIOLENCE, POLITICS, CULTURE to be central to understanding economic activity
*Positivism: A philosophy of science that states that the goal of science is to generate explanatory laws that explain and predict events and patterns in the real world. Positivist science believes researchers ought to maintain an
objective, universal truths
are the goal of research
Mix of qualitative and quantitative methods
PLACE & SPACE are central concerns
Study economic activity IN CONTEXT --culture, power, environment, history, etc.
Increasingly post-positivist* and 'interdisciplinary'
*Post-positivist approaches emerge in the 1970s and beyond. David Harvey's "Revolutionary and Counterrevolutionary Theory and the Problem of Ghetto Formation (1972), week 3, can be seen as the disciplines post-positivist manifesto