The global production
Description:
The global and national economies, as well as individual industries and firms, have undergone a tremendous amount of restructuring in the past several decades. Until the 1970s, the global economy was primarily composed of national companies operating mainly within their borders. The system was characterized by shallow integration versus the deeper integration of today, in which global production systems distribute production across continents and the globe. Linkages across firms and countries have strengthened as trade has greatly expanded and production has moved southward. No longer does a single firm control all of a company’s activities (e.g., General Motors in the 1960s), but rather the system operates from a network-centric perspective and a firm is disconnected from the customers it serves – for instance, Nike now has 900 suppliers and 650,000 workers spread over 50 countries. But while there has been a diffusion of production, the control has solidified on the retail side as a result of consolidation among top-tier firms and a proliferation among potential suppliers.
As an aspect of Economy Globalization, global production act an important role in stimulating the development of glbal economy, as well as facilitate the global communication and integration.
Enablers:
- Substantive R&D cost demands mass production and global market
- reduce production cost
- obtain advanced technology and other technical resource
- ocuppy local market
Inhibitors:
- While production has expanded across the globe, global governance has not been able to match the pace.
- The protection to local national industry hinder global production.
- The core technologies are still concentrated in developed countries.
Paradigms:
Emerging paradigms associated with the global production:
- The agricultural trade in fresh fruits and vegetables
World agricultural trade has increased by over 6% from 1961 to 2001 (because of increased demand from the US, EU, and Japan and increased supply from across Latin America and Sub-Saharan Africa). The value of produce exports has also simultaneously increased by 55% ($4.5 billion).
- Outsourcing of software to India
In the software industry, India has positioned itself as the developing country leader in customized software for the American market. Admittedly this dominant position has been the result of government policy that allowed foreign service providers in the country, development of an information technology infrastructure, and good rules governing venture capital.