The changing world economy Dr Truong Thi Kim

The changing world economy Dr. Truong Thi Kim Chuyen

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 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.

Interrelationships surrounding economic organization and spatial change

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 other words, in accounting for both the general and the unique.

2. ECONOMIC ORGANIZATION AND SPATIAL CHANGE Mode of production: the way in which human societies organize their productive activities and thereby reproduce their socioeconomic life.

5 forms of economic organization: 1) Subsistence 2) Slavery 3) Feudalism 4) Capitalism 5) Socialism.

Merchant capitalism (or mercantilism) Competitive capitalism Organized capitalism Advanced capitalism

Factors of production: land other natural resources, labor, physical and human capital. Different modes of production are also characterized by different forces of production (technology, machinery, means of transportation) and by different social formations (made up of specific proportions of different social classes).

Machinofacture: industrial production that was based less on handicraft and direct labor power than on mechanization, automation and intensively used skilled labor.

Bussiness services Transnational corporations (TNCs) Flexible production systems Disorganized capitalism

The most important economic sectors in this 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.

Technology and economic development Geographical path independence Creative destruction Technology systems Initial advantages Competitive advantages Diminishing returns Increasing returns to scale

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 Spatial division of labor (new) International division of labor External economies of scale Agglomeration: is a major feature of economic organization across a large number of manufacturing industries.

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