Chapter 2: The changing world economy

Created @March 17, 2023 4:34 PM

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A. Studying Economic Geography

Increasingly depend on complex interactions → economy of global scale → globalization
- 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 by
exports from internally generated industrial production, such as Argentina, Brazil, South Korea, Mexico, and Taiwan, rather
than on agricultural products or commodities

Three giant population blocs – China, Russia, and India have been drawn into the global market.

- BRICS: Brazil, Russia, India, China, and South Africa

⇒ all fight for a win-win solution

No national products = global products: iPhone

→ the product standards that are accepted by the world market → enable selling, compared with national products.
⇒ want trade? → meet the global standards

No national technologies: an airplane

→ many countries contribute technologies to build it, each part is marked by a country.

No national industries: a Tesla car

→ Tesla không sản xuất hết từng đó bộ phận, mà sẽ nhập nhiều linh kiện được sản xuất bởi các ngành công nghiệp
khác
e.g., kính xe, phần mềm video games...

No national corporation:
- MultiNCs: mainly the F&B industries
- TransNationalCorps.: Samsung, Apple
→ nhận biết qua tên: Samsung VN
Nếu công ty để tên chỉ là Samsung thì đó là 100%FDI và đem toàn bộ lợi nhuận trở về Hàn Quốc, còn nếu để tên là
Samsung VN thì sẽ khi đó sẽ chia một phần lợi nhuận cho VN
⇒ Công ty nào càng có nhiều TNCs thì càng có nhiều lợi nhuận

Chapter 2: The changing world economy 1

 e.g., tại vì nếu đầu tư theo diện FDI thì sẽ bị mất nhiều tiều thuế, còn nếu hợp tác chia lợi nhuận cho VN thì được hưởng
ưu đãi nhiều hơn, giảm chi phí

No national economies:
GNP: gross national product = GDP + FDI
GDP: gross domestic product
→ our country + foreign country

A. Economic Geography

✅The more unique, the more you’re involved in the global market.
e.g., những sản phẩm đặc biệt mà chỉ một hoặc một số khu vực có

✅Unique creates Local Variability

e.g., một sản phẩm là quả thăng long (dragon fruit) có thể tạo ra nhiều loại sản phẩm (nước ép, sốt, mứt, kẹo...) để bán; và
những biến thể này luôn sinh lời nhiều hơn là chỉ bán quả thăng long tươi.
→ cạnh tranh hơn trên thị trường

Tuy nhiên, vì hạn chế trong công nghệ và sản phẩm original của mình phải hợp tác với nước khác - nơi có công nghệ để
cùng sản xuất những biến thể kinh tế hơn
at all these direct, indirect and interaction effects are important to an understanding of spatial change. They are all implicated,
in accounting for both the general and the unique

B. Economic organization & Spatial change

‘Economic organization’ approximates to the concept of mode of production: the way human organizes their productive
activities and reproduce their socioeconomic life.

Modes of production / Forms of economic organization

The distinguish of modes of production: differences in the relations between the factors of production (land and other
natural resources, labor, physical and human capital)

Chapter 2: The changing world economy 2

 • Subsistence
• Slavery (laborer is bought and sold, along with other instruments of production)
• Feudalism (peasant laborer may own some instruments of production, but land and a
certain amount of product is the property of the feudal lord and the peasant is legally tied to a specific tract of land)
• Capitalism (laborer owns no instruments of production but is free to sell his or her labor power)
• Socialism
• Different modes of production are also characterized by different forces
of production (technology, machinery, means of transportation) and by
different social formations (specific proportions of different social classes)

✅Evolution of capitalization:
1st phase: Competitive capitalism → to become ‘bigger’

2nd phase: Organized capitalism → reorganize

3rd phase: Globalized capitalism

- Business services
- Transnational corporations (TNCs)
- Flexible production systems
- Disorganized capitalism

📗The most important economic sectors in the 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:

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 Geographical path independence # Geographical path dependence (historical relationship between present economic
activities associated with a place and its past experience)
e.g., công nghệ giúp sx ra những sản phẩm đặc thù

Creative destruction: new replace old

Technology systems: more primitive technologies are associated with higher levels of labor inputs than are more
sophisticated ones. So as technology has become more central to economic development, employment, particularly in
limited or semi-skilled jobs, has suffered.

Initial advantages: through improvements, the tech brings more profits

→ more dominant tech - more returns
→ 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.

. As new technologies eclipse old ones, industries—and sometimes entire industrial regions—are “dismantled” (or, at least,
neglected) as investors shift capital to fund the creation of new centers of profitability and employment.

Competitive advantages

Diminishing returns: sth loss, money for new plant investment

Increasing returns to scale: profits, benefits,... that stay with the firm

C. Spatial divisions of labor

Social change: in human interactions and relationships

e.g., a global firm has business in a host country, they need to know about the the culture, language, foods... to make
changes and then can work together.

Political change: polices to attract more investments

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 Culture change: khi một công ty nước ngoài đến và phát triển tại Việt Nam, họ sẽ mang theo những văn hóa của đất
nước họ tới, chẳng hạn như là văn hóa làm việc của người Nhật, tập trung cao độ, có trách nhiệm.

Demographic change: in labor, immigration, migration

Technological change: you have this and I have that, then we corporate.

In Fordist period, the basic division of labor was organized within the national economy or within regional parts of the
national economy.
• International division of labor: Filipina workers take on the household tasks of middle-class women abroad, while they
themselves may hire poorer workers to do their housework in the Philippines
• External economies of scale: if a city creates a better transportation network to service a particular industry, then all
companies in that industry will benefit from the new transportation network, and experience decreased production costs.
• Agglomeration: is a major feature of economic organization across a large number of manufacturing industries.

ADVANTAGE OF SPATIAL DIVISIONS OF LABOR:

1. Efficiency: Spatial division of labor can lead to greater efficiency and higher productivity as different regions focus on
producing those goods or services that they are most efficient in. By specializing in specific sectors, regions can enjoy
economies of scale, access to specialized inputs or resources, and a reduction in production costs.

2. Diversification: Spatial division of labor can also provide opportunities for countries or regions to diversify their economies
and reduce their reliance on a few key industries. This can make economies more resilient to external shocks or changes
in market conditions.

3. Improved standards of living: Spatial division of labor can lead to improvements in standards of living as regions or
countries can produce goods and services that they do not have the resources to produce on their own. This can create
new export opportunities and access to a wider variety of goods and services for consumers.

4. Specialization: Spatial division of labor can encourage specialization, innovation and technological advances. When
regions specialize in specific industries, they invest in research and development, leading to new technologies and more
efficient production processes.

5. Mutual benefits: Spatial division of labor can benefit both trade partners, as advantages in one sector can offset
weaknesses in another. As a result, trade can promote greater economic growth and opportunity for all parties involved.

GLOBALIZATION AND CHANGING SPATIAL DIVISIONS OF LABOR

In addition to regional specialization and regional dispersal, four other spatial divisions of labor can be identified:

• 3 tier Functional separation with management/research activities in major metropolitan regions: skilled labor in ‘old’
manufacturing areas, and unskilled labor in regional peripheries.

• 2 tier Functional separation with management/research activities in major metropolitan regions: semi-skilled labor and
unskilled labor in regional peripheries.
• regional and global Functional separation with management/research: skilled labor in more advanced industrial regions, and
unskilled labor in the global periphery.

• Division between areas of growth and decline: a. some areas characterized by investment, technical change, and job
expansion b. other areas characterized by stagnant and progressively less competitive production and job loss.

→ These new spatial divisions of labor have been possible because transportation and communications technologies have
created an environment in which firms can decentralize activities associated with primary production yet maintain
central control. A firm can remain headquartered in New York, , but locate manufacturing facilities in a location such as
Chennai, and reap the benefits of non-union labor forces, easier access to concentrated regional markets, and favorable
regulatory environments.

Under this new international division of labor (NIDL), investment and production are no longer organized primarily around
national economies.

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 Components or specific services are ‘sources’ or obtained from multiple suppliers in different countries (Outsourcing) and
assembled in several.
• Offshoring: gia công
• Neoclassical economics: để tăng trưởng kinh tế và phát triển, chính phủ nên thoả mãn cho các điều kiện kinh doanh
cạnh tranh, bảo vệ quyền sở hữu tư nhân và giảm hạn chế các quy định và thuế có thể gây ảnh hưởng đến doanh
nghiệp.
• Captive outsourcing: Captive outsourcing liên quan đến việc sử dụng các đơn vị hoặc công ty con được thành lập trong
cùng quốc gia để thực hiện một số công việc
• Offshore outsourcing: Một công ty Mỹ thuê xưởng may tại Việt Nam sản xuất sản phẩm cho mình gọi là Outsourcing.
Một công ty Mỹ thành lập nhà máy ở Việt Nam sản xuất gọi là Offshoring.
• Economic of scale: “Economies of scale là lợi thế về chi phí có thể xảy ra khi một công ty tăng quy mô sản xuất
và trở nên hiệu quả hơn, dẫn đến giảm chi phí trên một đơn vị sản phẩm.”
• Offshore financial centres

1. To become “No-national corporations”, the corporation/TNC would like to share a part of its profit with the host
country. Please suggest one case No-national corporations that you know.

→ In Vietnam, there is a very well-known example of “no-national corporation”, that is Samsung Vietnam. That identification
sign is the name of the business with the word "Vietnam" followed by it. If there is not the word "Vietnam", then the enterprise
is completely FDI invested from abroad, all profits will then be brought back to the parent company in foreign countries. In
addition, two characteristics to confirm a no-national corporation are:
- No national product: Samsung Vietnam products are exported to 128 countries and territories around the world. Currently,
50% of Samsung's demand for mobile phones is produced in Vietnam. This proves that Samsung's products, especially
phones, meet the global standard of the No-national product element. Because only when the product meets the tastes and
needs of consumers at the world level, it can be exported so much.
- No national technologies: that is each country will contribute to some parts of the product. For example, Samsung factory
chain in Bac Ninh has 4 factories specializing in the production of components such as LCD screens, cameras, and cases for
mobile phones. Besides, there are also many phone accessories from Japan such as surface acoustic wave filters, power
amplifiers...

2. To involve in the global economy, country should have unique and local variability. Please give example from
one unique raw product of one location you know, which can produce various local products to be sold at the
global market?

→ For example, it is Binh Thuan dragon fruit. Binh Thuan is one of the leading provinces in Vietnam in terms of dragon fruit
production, which provides many unique products made from this fruit, such as wine, dried jam, dried jam, candy, ice cream.
dragon fruit, dragon fruit sauce, dragon fruit noodles, wine... Especially, Kim Hai hi-tech farm has exported to Korea many
products made from dragon fruit such as juice and candy.

3. Please give one example of the ‘Relative distance’.

→ Instead of measuring distance in standard units such as km, m or miles, measuring distance in relative units such as time,
currency is also used a lot in life. An example is to travel from Vietnam to Russia, via a direct flight at the Hanoi route is 10
hours. This is the shortest flight time. The average ticket price ranges from 11 to 13 million VND, depending on the route and
airline.
- Hanoi - Russia: This route is operated by Vietnam Airlines and Aeroflot with flight time from 10 hours to 10 hours 25 minutes
(non-stop)
- Da Nang - Russia: Currently, there is no airline providing direct flights on this route, so the flight time will be from 21:25
hours to 28:20 minutes with at least 1 to 2 stops.

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