Flexible production, geographical spread and innovation

It is hard to communicate ideas that are not totally clear to its owner. Explanations are complicated and may follow a non-linear logic until all aspects of the idea are connected together. Understanding of a scientific paper as complex as a Master Thesis, as it is the case here, is of course conditioned to how well theories are articulated to sustain the idea. And that is not where I am yet. Therefore, expect here some overlaps, some rolling back, and some fuzz, until the idea is more organized. This post is another attempt to show what the objective of my project is.

For the lack of connection on the specifics of the topic, I must write as the ideas emerged in my head, and will even support it with visual aid, that maybe will be clearer than my words – I’ve been criticized often about my complex writing style, and that it makes harder for the reader to get my ideas. In advance, I’m sorry for that. Anyway, until I find the best way to translate these thoughts to paper, I’ll be trying around here. It is nevertheless a good exercise to do so.

References:

DAVENPORT, Thomas; Prusak, Laurence (2000): Working Knowledge: How organizations manage what they know. Boston: Harvard Business School Press.

DICKEN, Peter (2007): Global Shift: Mapping the changing contours of the world economy. 5th edition, Sage Publications, London-UK.

LUNDVALL, B.A.; Johnson, B. (1994): The Learning Economy. Journal of Industry Studies, Volume I, Number 2

Qualitative change

Now I can really start on this.

The opening word of this blog was merely that. My first ideas, with very little reading about the topic itself, and no time to search for the sources that led me to those affirmatives.

At this time I present some arguments on why “Globalization has shattered the idea of centralization and vertical integration” and transformed our current economy. Why it is possible to affirm that it is increasingly a global economy, although there is no pure globalization as – I admit – it may have sounded at the opening word.

I take the same approach here as used by Dicken (2007) where he presents some chains of thought about globalization only to conclude that, there is no single truth about globalization or localization. According to him, there is a spectrum of realities between this dichotomy, making the world economy far more complex to analyze.

Before moving on to the argument on why the world is increasingly global, though, it must be said that Dicken (2007) makes his analyzes emphasizing that the economy, although influenced by Civil Society Organizations (CSOs), National States, Labor, Firms and Consumers, there is asymmetry in these relationships. And for him, the unbalance in these relations is towards firms, especially the transnational ones, emerging also from the possibility of internationalization of assets.

The author presents that, even though movement of people, money and goods across national borders is present in the world since before the industrial revolution, the change affecting our current reality is ‘qualitatively different’ from the past. As the author explains:

Today we live in a world in which deep integration, organized primarily within and between geographically extensive and complex transnational production networks, and through a diversity of mechanisms, is increasingly the norm.

Such qualitative changes are simply not captured in aggregative trade or investment data. (…) For example, in the case of international trade, what matters are not so much changes in volume – although these are important – as changes in composition. There has been a huge increase in both intra-industry and intra-firm trade, both of which are clear indicators of more functionally fragmented and geographically dispersed production processes (Dicken, 2007, p. 7-8).

However, as said before, this is not to say that transnational production networks (TPNs) are the only available production model. On the contrary, this often reflects on regional, national, and local levels. After all, production has to take place somewhere.

The choice of place though, is highly influenced by the different set-ups of localized institutions that such as culture, local values, and environmental issues. And while states and local economies are embedded territorially, transnational corporations, ‘slice through’ these boundaries searching for more flexible regulations and socio-cultural conditions that fit the needs for their activities. The result of such a process is the geographical spread of activities that qualitatively changed current economy (Dicken, 2007).

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Suggestions, comments, critics, please feel free to post and discuss. The objective here is exactly to bring contributions and share views to create a debate to enrich our understandings.

Thanks in advance!


REFERENCES:

DICKEN, Peter (2007): Global Shift: Mapping the changing contours of the world economy. 5th edition, Sage Publications, London-UK.