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COMPETITIVE TERRITORIES IN THE GLOBAL ECONOMY
James R. Wilson
Email: [email protected]
Twitter: @jamierwilson
SESSION-BY-SESSION PROGRAMMETOPIC FACULTY DATESIntroductory Session James Wilson 6 September 1. Globalisation and competitiveness
We will explore the phenomenon of globalisation; from historical roots to the impacts that it is having today on the competitiveness of businesses and territories.
James Wilson 8 September13 September 15 September 20 September
1. Clusters, global value chains and competitive territories We will introduce the popular concept of ‘clusters’ as a key link between the competitiveness of territories and firms, analysing and critiquing the academic foundations of the concept and exploring its practical usage. We will examine the lifecycles of clusters, the relationship between their development and territorial economic development, their situation in global value chains and global innovation networks, and the types of institutions and actions that support clusters and cluster development.
James Wilson
22 September27 September29 September4 October6 October
1. Open innovation in territorial context
We will study the origins of the strategy of open innovation and explore its evolution in practice, including analysis of different types of open innovation patterns and the relationship between these and territorial competitiveness.
Henar Alcalde 11 October 13 October 18 October 20 October 25 October 27 October3 November
1. Innovation systems and the role of public policy We will introduce the concept of innovation systems and its implications for territories (either nations or regions). We will deepen in the understanding of its components and their relationship with a strong emphasis on the understanding of knowledge organisations and the role of public policy within a system. In addition, we will introduce the concept of policy-learning for understanding public policy (with a stronger emphasis on innovation policy).
Edurne Magro 8 November 10 November 15 November17 November22 November24 November29 November
Revision Session James Wilson 1 December Written test James Wilson 13 December
• It is a complex, multifaceted phenomenon, incorporating changes in economic, political, cultural, social relationships
• In particular, globalisation refers to the changes in these relationships as new technologies combine with the dominant capitalist context in reducing the significance of territory
• As markets and production chains become ‘global’, there are clearly economic, political, cultural and social implications for different actors …
RECAP: SO WHAT IS GLOBALISATION?
What are the implications of ‘globalisation’ for business?
• Businesses need to recognise that they are operating in global market places– This presents both threats and opportunities
• Perhaps most crucially, businesses need to understand that globalisation is inextricably linked with the creation and communication of knowledge and information– Success means staying one step ahead
• There is also a need to recognise and respond to some of the ‘opposing tendencies’ and be aware of ‘backlash’– For example, regionalisation and localisation are important counter
forces to global markets• Global businesses able to respond to local markets?• Local businesses able to project themselves globally?
SOME IMPLICATIONS FOR BUSINESS
Similar implications
for territories/ societies?
• Some would say ‘yes’:– Wealth spreading around the world through the globalisation of trade
and production• However, some would say ‘no’
– There is a loose ‘anti-globalisation movement’ incorporating many diverse groups, with different agendas
• First coming to prominence in Seattle in 1999– They are linked by a belief that ‘globalisation’ is threatening certain
things: culture, economy, environment etc.
IS GLOBALISATION A POSITIVE FORCE?
In many ways, this is an extension of long-held concerns with inequalities and tensions created by capitalism
• Given these concerns, and given your own concerns, do you think there are alternatives to ‘globalisation’?
• Is ‘globalisation’ irreversible?• Would it be desirable to reverse it?
• It may be possible to reverse or stifle such trends by re-implementing borders etc., and to some extent this may even be starting to happen ... ?
• But is this the way forward?– The problems, and the frustrations, are not with ‘increasing and
deepening global relationships’ per se, but with the forms of capitalist organisation
• Tendency to widen divisions between ‘winners’ and ‘losers’
We must ask, therefore, if there are alternative forms of globalisation?
ARE THERE ALTERNATIVES TO GLOBALISATION?
Towards a more durable form of globalisation?
• We have seen that globalisation is a complex phenomenon!– It is multi-faceted and highly contested– There is some middle ground however, which sees something
fundamental happening to the economic, social, political and cultural relationships around which the world is organised
– These changes are influenced particularly by changing geography, changing technology, and the capitalist context
– In turn there are implications for business, and for societies, around the world
– But questions remain as to how ‘globalisation’ can best be harnessed as a positive force, how we can make it work better
– The real issue today, for both firms and societies, is finding some solutions to these questions …
GLOBALISATION: SUMMARY
Building on this context, in the next couple of sessions we will explore what it means for territories to ‘develop’ and be ‘competitive’ in the global economy
• During the last decades economic development policies around the world have placed strong emphasis on ‘free markets’– The Washington Consensus: IMF, World Bank (macroeconomic
stabilization, economic opening with respect to both trade and investment, expansion of market forces within the domestic economy)
• We live in an era of widespread acceptance that government should play a limited role in the economy– It should ensure macroeconomic stability, property rights, and might play a
role in providing education, health ... – BUT the actual organisation of most economic activity is best left to firms:
here the best policy is no policy• This is an era which has seen the rise of transnational firms, which
now play a dominant role in economies
THE ECONOMIC DEVELOPMENT CONTEXT
• In 1972 Stephen Hymer made the following predictions for the world economic system in the year 2000 ...
A “regime of North Atlantic Multinational Corporations”, that would “tend to centralize high-level decision-making occupations in a few key cities in the advanced countries, surrounded by a number of regional sub-capitals, and confine the rest of the world to lower levels of activity and income”
“the tendency of the system to produce poverty as well as wealth, underdevelopment as well as development”
SO WHO CONTROLS ECONOMIC DEVELOPMENT?
• Level III: Spread throughout the world according to where appropriate (low cost) manpower, raw materials and end markets are located
• Level II: More geographically concentrated in regional sub-capitals, where skilled workers, superior communication systems etc. are located
• Level I: Concentrated in a handful of key cities– London, New York, Paris, Bonn, Tokyo– Moscow and Beijing
Income, status, authority, and consumption patterns would radiate out from major centres, and the existing pattern of inequality and dependency would be perpetuated, implying that the basic relationship between different countries would be one of superior and subordinate, head office and branch plant. Hymer (1972)
THE INTERNATIONAL DIVISION OF LABOUR
COMPANIES VS COUNTRIES
Sources: Fortune Magazine, May 2010 and World Bank, 2010
Comparison of the World’s 25 Largest Corporations with the GDP of Selected Countries (2010)
http://www.globalpolicy.org
Top 200: The Rise of Corporate Global Power (2000)1. Of the 100 largest economies in the world,
51 are now global corporations; only 49 are countries.
2. The combined sales of the world's Top 200 corporations are far greater than a quarter of the world's economic activity.
3. The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 9; that is they surpass the combined economies of 182 countries.
4. Over half of the sales of the Top 200 are in just 5 economic sectors; and corporate concentration in these sectors is high.
5. When General Motors trades with itself, is that free trade?: One-third of world trade is simply transactions among various units of the same corporation.
• Is it possible to alter current globalisation, so that it becomes more ‘democratic’?
• This would imply fundamental concern with governance– Governance of firms, networks of firms, governments, international
institutions ...
• With such a focus it is possible that many of the concerns of the anti-globalisation ‘movement’ might be addressed: – Is this movement really anti ‘globalisation’?
• Business cannot afford to ignore these concerns– Reflected in increasing concern with ‘ethical business’, ‘corporate and
social responsibility’ and ‘good governance’
Economic globalisation is not some kind of immutable inevitability, but a set of processes that is socially constructed, and therefore can be encouraged or resisted by actors/institutions at various scales Coe and Yeung, 2001
DEMOCRATIC GLOBALISATION
What does the term ‘economic development’ mean to you?
THE CONCEPT OF ECONOMIC DEVELOPMENT
• ‘Development’ is extremely widely used, in different contexts– Development is a ‘plastic word’
• It is often used to categorise places, and to make judgements:– ‘Developed’, ‘Developing’, ‘Less Developed’ ...– But these categories depend on a particular view of what ‘economic
progress’ actually means– Thus labels are open to different interpretations, and always carry with
them the views of those that use them
When thinking about the economic development of a particular place (city, region, country) ... perhaps the aims and objectives of people living in that place should define the concept of economic development ...?
DEVELOPMENT?
CONCEPTUALISATIONS OF ECONOMIC DEVELOPMENT
DEVELOPED(€)
LESS DEVELOPED
(€)
YES
NO
Developing Developing
NotDeveloping
Not Developing
Progress Towards Community Defined Objectives?
Source: Roger Sugden & James R. Wilson (2002). ‘Economic Development in the Shadow of the Consensus: A Strategic Decision-Making Approach’, Contributions to Political Economy, 21: 111-134.
SOCIO-ECONOMIC DEVELOPMENT
• If we accept that economic development must reflect the aims and objectives of people, then it becomes extremely difficult to separate out ‘economic’ processes from ‘social’ processes– ‘Economic processes’ influence social process and vice versa– They both need to be linked to democratic processes
• However convenient it is to do so, analysis and policy should not try to treat these processes separately – See Layard (2006) on the difference between a policy-maker’s ideal
world and the real-world
• Thus we switch from a focus on economic growth to a focus on socio-economic development
This has important implications for how we measure the progress of territories … and also for how we understand the competitiveness of territories
• Czech Republic• Denmark• Finland• France• Germany• Italy• Netherlands
• Poland• Russia• South Africa• Spain• Sweden• Switzerland• United Kingdom• United States
HOW WOULD WE RANK THE DEVELOPMENT OF OUR COUNTRIES?
