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Dr.

Nguyen Thi Phuong Chau


Course email:
weg_worldeconomicgeography@yahoo.com
1. Studying Economic Geography
2. Economic Organization and Spatial Change
- Evolution of Capitalism
- Technology and economic Development
3. Spatial Divisions of labor
- Globalization and changing spatial divisions of labor
- Outsourcing and global commodity chains
1. Studying Economic Geography
Rapidly increasing interdependence of the world economy
regions and cities everywhere depends increasingly on complex
interactions economy of global scale ‘globalization’.
World’s 6.2 billion inhabitants now are integrated into global
markets for goods and finance.
In late 1970s only a few less developed countries (LDCs) had opened
their borders to flows of trade and investment capital.
Three giant population blocs – China, Russia, and India have been
drawn into the global market.
Emerging of NICs, now is BRIC, have already become involved in
deep linkages.
1. Studying Economic Geography
Less developed countries (LDCs): Countries that are not fully
industrialized or do not have sophisticated financial or legal
systems. These countries, also called members of the Third
World, typically have low levels of per-capita income, high
inflation and debt, and large trade deficits.
Newly industrializing countries (NICs): Developing country
whose economy is supported to a greater or lesser degree on
exports from internally generated industrial production, such as
Argentina, Brazil, South Korea, Mexico, and Taiwan, rather than
on agricultural products or commodities.
BRIC: Brazil, Russia, India, and China
1. Studying Economic Geography

We are living through a transformation that will rearrange the politics


and economics of the coming century. There will be no national
products or technologies, no national corporations, no national
industries. There will no longer be national economies, at least as we
have come to understand that concept … As almost every factor of
production – money, technology, factories, and equipment – moves
effortlessly across borders, the very idea of an American economy is
becoming meaningless, as are the notions of an American
corporation, American capital, American products, and American
technology.
Reich (1991:3,8)

• All sorts of people in different places are affected by globalization.


1. Studying Economic Geography
General economic
forces

Socioeconomic
Local variability
relationships

combination
General Unique
-spatial change-
Universally applicable Something distinctive

The point emphasize at the moment is that all these direct, indirect and
interaction effects are important to an understanding of spatial change.
They are all implicated, in accounting for both the general and the unique.
1. Studying Economic Geography

Question
Furthermore, how should we approach the local,
regional and national implications of less newsworthy
but equally profound changes in the world economy,
such as the remarkable developments that have taken
place in international finance and banking?
2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE

‘Economic organization’ approximates to the concept of mode


of production: the way human organizes their productive
activities and reproduce their socioeconomic life.
Five major modes of production (or forms of economic
organization):

Subsistence Slavery Feudalism Capitalism Socialism


2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE
The distinguish of modes of production: differences in the relations
between the factors of production (land and other natural resources,
labor, physical and human capital)
Subsistence
Slavery (laborer is bought and sold, along with other instruments of
production)
Feudalism (peasant laborer may own some instruments of production, but
land and a certain amount of product is the property of the feudal lord and
the peasant is legally tied to a specific tract of land)
Capitalism (laborer owns no instruments of production but is free to sell
his or her labor power)
Socialism
• Different modes of production are also characterized by different forces
of production (technology, machinery, means of transportation) and
by different social formations (specific proportions of different social
classes)
2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE

Evolution of capitalism
First phase: Competitive capitalism
Second phase: Organized capitalism
Third phase: Globalized capitalism
2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE

Bussiness services
Transnational corporations (TNCs)
Flexible production systems
Disorganized capitalism
2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE

The most important economic sectors in the


informational economy are:
- High-technology manufacturing
- Design-intensive consumer goods, ranging from
high-fashion footwear to entertainment
products. Selling in market niches around the
world.
- Financial and business services.
2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE

Technology and economic development


Geographical path independence
Creative destruction
Technology systems
Initial advantages
Competitive advantages
Diminishing returns
Increasing returns to scale
2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE

Once dominant technologies emerge in a region, they


become progressively more “locked in”. Small initial
advantages in the use the critical new technologies and
subsequent refinements in them bring much larger or
increasing returns to those firms (and places) that have
them.
3. SPATIAL DIVISIONS OF LABOR
In Fordist period, the basic division of labor was organized
within the national economy or within regional parts of the
national economy.
International division of labor
External economies of scale
Agglomeration: is a major feature of economic organization
across a large number of manufacturing industries.
3. SPATIAL DIVISIONS OF LABOR
In addition to regional specialization and regional dispersal, four
other spatial divisions of labor can be identified:
Functional separation with management/research activities in
major metropolitan regions: skilled labor in ‘old’ manufacturing
areas, and unskilled labor in regional peripheries.
Functional separation with management/research activities in
major metropolitan regions: semi-skilled labor and unskilled
labor in regional peripheries.
Functional separation with management/research: skilled labor
in more advanced industrial regions, and unskilled labor in the
global periphery.
Division between areas with investment, technical change and
job expansion, and other areas with stagnant and progressively
less competitive production and job loss.
3. SPATIAL DIVISIONS OF LABOR

Components or specific services are ‘sources’ or obtained


from multiple suppliers in different countries
(Outsourcing) and assembled in several.
Offshoring
Neoclassical economics
Captive outsourcing
Offshore outsourcing
Economic of scale
Offshore financial centres
http://www.sourcingmag.com/content/what_is_outsourci
ng.asp
Interrelationships surrounding economic
organization and spatial change
1. Studying Economic Geography
- Discussion -

1. What factors push the changes of economic


organization?
2. How space in geography affects the changes of economic
organization?
3. How economic organization and spatial change affect the
changes of Demographic, Political, Cultural, Social, and
Technological?
4. What ‘Comparative Advantages’ can help the host
countries call for the foreign investment to develop the
economy?
1. Studying Economic Geography
- Discussion -
The factors of geographical space affect the changes of
economic organization:
Tracing the location of natural resources
Income inequality between DCs and LDCs
Comparative advantages
Natural resources
Labor
In-side market
Good government
Good institutions and policies

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