HOLY NAME UNIVERSITY

GEC WORLD (THE CONTEMPORARY WORLD)

MIDTERM TOPIC 001

ECONOMIC CHAINS AND NETWORKS

Trade of goods and services is clearly the central of the global economy. Much of the trade takes place in the
interconnected circuits of one kind or another.
o Supply Chains – These are general label for value-adding activities in the production process.
 A supply chain begins with raw materials and follows the value adding process through a variety
of inputs and ultimately to a finished product.

 For example, the process might begin with some comparatively inexpensive raw material, say
cotton, and at various steps along the way workers and technologies add value to the cotton.
(e.g., transforming it into thread or producing a T-Shirt) so that in the end the finished product-
the T-shirt in this case –has greater value than the cotton with which the process began.

o International Production Networks – These involve the networks producers involved in the process of
producing a finished products.
 Multinational Corporations (MNC’s) are seen as playing the central role, as being the “flagships,”
in these networks.

o Global Commodity Chains - An internationally integrated process of economic links between

corporations and workers whereby commodities are gathered, transformed into goods and services, and
distributed to consumers across the world.
 o Global Value Chains - Describes the people and activities involved in the production of a good or service
and its supply, distribution, and post-sales activities (also known as the supply chain) when activities
must be coordinated across geographies.
 These highlights the relative value of those economic activities that are required to bring a good
or services from conception to, through the different phases or production (involving a
combination of physical transformation and the input of various producer services), delivery to
final consumers, final disposal after use.

GLOBAL VALUE CHAINS: CHINA and the US

To give specificity to the idea of global value chains, look at the several specific examples of such chains,
all of the which involves trade between china and the US, although many countries in the world are involved
in these or similar chain.

o Scrap Metal - Scrap metal recycling is one of the most valuable recycling markets in the world. Unlike
some other recyclables, metal can be recycled endlessly.
 It has a great deal about globalization
 It is a big business, since the prices had increase dramatically resulting to higher global demand
for such commodities.
 The major global source of scrap metal is the US
 2/3 of the steel made in the US comes from recycled steel rather than from the iron ore and
virgin steel.
 It has high level of consumption for the making of cars, lawnmowers, and the like.

o Metal Processing Cycles and Scrap Metal Recycling Process

 The work involves extracting usable metal from scrap is done elsewhere in the world, especially
in China.
 Unsorted aluminum and copper scrap is shipped from scrap metal companies in the US to
recycling companies in China.

o Why ship it all the way to China?

 Chinese are willing to do work that most Americans would refuse to do it for very low wages.
 Those who do the recycling work in china are paid about $ 140 a month.
 Woman in gloves and masks and white uniforms sorts the aluminum intro different
grades. Separating small pieces of copper wire and whatever else they might find.
 Men did the smelting work turning the scrap into liquid metal, which is later cooled in
molds.
o Uses of Scrap Metals
 Aluminum – Use to the productions of engine casing of new cars, irons, coffee pots, grills and
frying fans. These finished products are shipped back to US to be sold as new products, an
eventually scrapped one again.
 Also use to the production for the Chinese construction industry –rebar, beams and
floor decking. These steels flows into the skyscrapers sprouting all around Chinese Cities
and into new factory towns.
 Copper – Use to wire the millions of house being built for China’s new middle class.
 The irony of this is that, “China’s industrial might is being constructed out of the ruins of
(The US).”
 The World’s largest scrap yard has recently been built not far from Shanghai.
 The large steel mill is nearby to process the scrap metal.
 Chines may no longer needing America for scrap metal.
 They will not need to engage in trade with the US for such scrap since they will be
producing more than enough.

o Waste Paper - is any kind of paper, which cardboard were completed the function in any use area, is
discarded, processed and turned into new paper products.
 One of the Richest Woman in the world ($1.5Billion Net worth)
 Owner of Nine Dragon Paper (72% Controlled by Zhang Family and L A-
based America Chung Nam –the largest exporter to China) take mountains
of waste paper from the US, ship it to china, recycle it into corrugated
boxes – the boxes are used to ship goods to various places around the
world including the US – and once the boxes have arrived at their
destination and been unpacked, they are turned into scrap and the
process beings all over again.
 Nine Dragon Paper – is already one of the world’s largest producers of
paper and it could possibly soon be number one in the world, surpassing
such well-known giants as Weyerhaeuser.

o Paper Production and Recycling Process

The process of waste paper recycling most often involves mixing used/old paper with water and
chemicals to break it down. It is then chopped up and heated, which breaks it down further into strands of
cellulose, a type of organic plant material; this resulting mixture is called pulp, or slurry.