Political economic relationship between the more developed and less countries

Economic development - Wikipedia

political economic relationship between the more developed and less countries

For others, the pressures of compulsion are less A large number of big firms responded by moving their operations to sites in countries such as Vietnam or relevant to the more advanced economies as in the so-called for a level playing field in relation to labour practices. One of the most salient changes in the world economy since has been . How do relations among countries and the structure of the international system For most of the postwar period, less developed countries (LDCs) have used trade . outcomes links political checks and balances to the credibility of government If these imperfections are more pronounced in less developed countries relative size and power of economic interests in a country, formal institutions, particularly.

A monumental body of scholarly research seeks to understand the drivers behind the vast and accelerating patterns of socio-economic inequality in the global political economy.

North–South divide - Wikipedia

This article, an adapted version of the Martin Wight Memorial Lecture, contributes to this effort by focusing on a dimension of the picture which has received surprisingly little attention, namely, the implications for socio-economic inequality of the particular form of industrial organization that has come to underpin the contemporary global economy—one organized around global value chains and global production networks.

It proposes an approach which sees inequality as arising at the intersections of three dimensions of asymmetry—asymmetries of market power, asymmetries of social power and asymmetries of political power—which underpin and crystallize around global value chains. It explores these dynamics in the particular arena of labour and labour exploitation in global value chains, as a means of shedding a valuable wide-angle beam on the big questions of power and inequality in the contemporary global political economy.

As the World Economic Forum meeting convened in Davos in Januaryheadlines were dominated by reports from Oxfam which laid bare the startling—and growing—scale of inequality in the global political economy. Continuing a theme of its research over several years, Oxfam presented updated figures showing that the eight richest billionaires in the world controlled more wealth than the poorest 50 per cent of the world's total population.

Outside China, progress has been patchy, and an overall decline in extreme poverty has not been sufficient to reduce the total number of people living in such conditions.

Perhaps most significantly, while there has been a drop in extreme poverty, there has been much less progress on poverty in general: Not least for that reason, the task is one of ever greater urgency. My contribution to this effort here focuses on a dimension of the picture which has received surprisingly little attention: To put the point slightly differently, global patterns of inequality are critical to understanding how the GVC world was enabled to come into being from the s onwards, and how it continues to serve the powerful economic and political interests which benefit from this form of global economic organization.

Conversely, the nature and functioning of the GVC world are central to understanding the drivers of the patterns of inequality that we have observed being consolidated over this period of time, and by extension to understanding the political and economic juncture at which we find ourselves at the start ofdominated by an emphatic shifting of domestic and international political sands.

The mobilization of these asymmetrical relations of market power to produce a global economy marked by significant concentrations of wealth and assets is now amply documented.

I propose instead an approach which sees inequality as arising at the intersections of three dimensions of asymmetry in the power relations that crystallize in and around GVCs—asymmetries of market power, asymmetries of social power, and asymmetries of political power. Asymmetries of market power refer to the relative positions of firms within GVC structures, characterized by oligopoly power among lead firms and intense competition among supplier firms, 20 and the ways in which these positions correspond with degrees of control over production and the capture of value.

Asymmetries of social power refer to wider patterns of poverty, wealth and inequality in the societal contexts in which GVCs are rooted, as well as between actors within GVCs, and how forms of social power are mobilized to reinforce these patterns. Asymmetries of political power refer to the wider political dynamics which shape the governance of GVCs, highlighting the interactions between political interests in shaping the governance of GVCs, and by extension their social underpinnings, at the local, regional and global scales.

These three dimensions of asymmetry are depicted in stylized terms in figure 1and the task is to capture how these dimensions interlock and intersect to produce observed patterns of socio-economic inequality. The political economy of global value chains Figure 1: View large Download slide The political economy of global value chains Such an approach opens up an expansive set of questions and an expansive terrain for research, both of which far exceed the possible remit for a single article.

I therefore wish to take a microcosm of these dynamics, exploring in necessarily illustrative terms what this triangle looks like, in theory and in practice, in the particular arena of labour and labour exploitation in GVCs. Labour relations are key to understanding the dynamics of value creation and capture in GVCs, in terms both of wealth concentration and of poverty and vulnerability.

This focus accordingly sheds a valuable wide-angle beam on the big questions of power and inequality in the contemporary global political economy.

political economic relationship between the more developed and less countries

By taking each of these dimensions of asymmetry in turn and exploring their interactions, I hope to elucidate how the evolution of GVCs constitutes a critically important means through which socio-economic inequality has become a defining feature of the contemporary global political economy. Asymmetries of market power Figure 2 overleafdepicting the distribution of value in the production of Apple's iPhone, tells us at a single glance much of what we need to know about where value is created and captured in GVCs, and by whom or what.

The Responsibility for Developed Countries to Help Developing Countries: Bill Gates (2008)

What jumps out immediately is that more than half of the total value, across the whole of the production process, is captured by the lead firm—Apple—as profit. The figures for labour costs, by contrast, offer an insight into both the relationship between capital and labour in the global economy, and the relative proportions of value that are captured by each. The costs of materials involved in production are vastly greater than the human input costs associated with labour.

The limited effect of Chinese financing and investment on the bargaining power of traditional donors Figure 2: View large Download slide The limited effect of Chinese financing and investment on the bargaining power of traditional donors It is well known that the iPhone value chain stretches across a wide range of geographic locations, with the largest concentration of suppliers being in east Asia.

Yet conventional depictions of the value chain tend to focus only on its upper tiers, specifically on registered factories and the increasingly powerful giant supplier firms in east Asia, of which Foxconn is the most notable in the electronics sector.

political economic relationship between the more developed and less countries

Very often these will be subcontractors to the first- or second-tier supplier firms, or informal units operating way down in the least visible parts of the value chain. These extend to the tiers associated with the production of raw materials for the electronics industry, which in mobile phone production notably include the mineral coltan. This is especially so in those value chains characterized by relationships between firms based on arm's-length subcontracting arrangements, as distinct from those organized around direct ownership and control by the lead firm of a network of affiliated entities.

Indeed, the length and complexity of value chains organized around subcontracting, in electronics and many other sectors, mean that productive activities in the lower tiers are in every sense removed from the world of first-tier suppliers and lead firms.

It is especially common for workers in the lower tiers of the value chain, particularly in informal units and home settings, to be entirely unaware of the final destinations of the products they contribute to producing, or of which lead firm or supplier firm controls the production process in which they participate. Starting with the illustrative iPhone example helps to underline the core point that the globalization of production along these lines is no accident: GVCs have been purposefully constructed by powerful economic and political interests to bring about a particular model of globalized production.

Economic development

We have already established that this pattern of production is driven by lead firms seeking to create and harness significant global asymmetries of market power in the interests of generating and capturing profit, facilitated and buttressed by states and other political actors. With the maturing of GVCs, it has come to be firms, not states, that now play the major role in determining what will be produced where and on what terms, and what will be traded on what terms.

So, to a great extent, global patterns of production that were once strongly shaped by constellations of state policies are now artefacts of value-chain governance. States are, though, by no means passive bystanders: The loosening of competition policy across the world reflects the much greater political tolerance of the high levels of market concentration and the high levels of market power that characterize lead firms in GVCs, and as a consequence the trends of massive wealth concentration which form a core feature of the global political economy of inequality.

The increasing concentration of market power is apparent in many sectors. Examples include retailing Walmart, Amazon, Alibabaoffice software and operating systems Microsoftsmartphones Apple and Samsunglarge commercial aircraft Boeing and Airbussoft drinks Coca-Cola and credit card networks Visa and MasterCard.

Especially where required quality standards are high, labour becomes the key arena for input cost reduction; equally, in sectors where the key requirement is flexibility in the face of significant commercial risk whether for reasons of seasonal dynamics or highly variable commercial conditionsbusiness models are built around the aggressive management of labour supply, conditions and wages. This is particularly the case where incentives imposed by external stakeholders to adhere to labour and social standards are low: Firms in price-sensitive and labour-intensive sectors, as well as firms which rely on retail strategies, prefer less stringent regulation and will go to some lengths to secure those conditions.

We know that diverse forms of labour exploitation are embedded in Apple's supply chains and those of other electronics producers, not least from a steady flow of revelations about the use of forced labour, unpaid student intern labour and child labour in supplier factories for Apple, Samsung, HP, Dell and other firms.

The Dictionary of Human Geography defines development as "[p]rocesses of social change or [a change] to class and state projects to transform national economies".

Economic Development is a measure of progress in a specific economy.

  • North–South divide

It refers to advancements in technology, a transition from an economy based largely on agriculture to one based on industry and an improvement in living standards. The Brandt Line is shown in bold.

Digital and technological divide[ edit ] World's ISS space centres The global digital divide is often characterised as corresponding to the north—south divide; however, Internet use, and especially broadband access, is now soaring in Asia compared with other continents.

This phenomenon is partially explained by the ability of many countries in Asia to leapfrog older Internet technology and infrastructure, coupled with booming economies which allow vastly more people to get online.

political economic relationship between the more developed and less countries

This facilitated an uneven diffusion of technological practices since only areas with high immigration levels benefited. Immigration patterns in the twenty-first century continue to feed this uneven distribution of technological innovation.

political economic relationship between the more developed and less countries

People are eager to leave countries in the South to improve the quality of their lives by sharing in the perceived prosperity of the North. Africans and Southwest Asians want to live and work in Europe.