To what extent can the globalised economy explain key developments in the motor industry?

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 To what extent can the globalised economy explain key developments in the motor industry? The case of China

Introduction

  The influence of globalization on the international automotive industry has been so colossus that firms are constantly adapting and responding to the changes and requirements, in order for them to compete in the global economy. Globalization is truly leading the revolution of evolution and has had a profound effect on the world, as view it. The concept of globalization has become the centre of much political debate and controversy in the modern era. Many of the controversies that have developed include variance over the literal definition of the term, globalization. From academics, politicians and scholars, individuals using this term often have contrasting explanation of what it means. However, one thing for certain is that there doesn’t appear to be a consensus, surrounding this phenomenon.

  Scholte stresses the importance of cultivating an agreeable definition for globalization in a modern context in order to ‘advance both knowledge and policy in contemporary society’ (Shaw, 2001: 6). Scholte has argued that at least five different explanations that are used commonly. These definitions are closely related, but the concepts mentioned are vastly different. In the first instance, the definition entails with the notion of internationalization. This explains the growth in international exchange and inter-dependence. Hence, with developing flows of trade and investment, there is the possibility of expanding beyond an international economy. However, it is questionable  the need to substitute ‘internationalization’ by ‘globalization,’ simply because the concept of expansion and the perception that countries are closely related isn’t new and has been going on for a long time, many centuries in fact. For those scholars such as Robertson, who believe this, MacGillivray’s contradictions helps to explain their case. Alex MacGillivray identifies five key moments (decades) over the past 500 years. At these moments, he believes globalization took a great leap forward. MacGillivray offers five different decades; the Iberian carve up (1490-1500), the Britannic meridian (1880-90), Sputnik world (1955-65), the global supply chain (1995-2005) and thermo-globalization (Cogburn, 1998).

 The second definition is how globalization is viewed as liberalization. The process of removing restrictions such as tariffs on movement between countries, with the intention of producing a more ‘open’ and ‘borderless’ economy (Shaw 2001: 16). The third concept considers globalization as universalization. In this use, globalization is ‘the process of spreading various objects and experiences to people’ all over the world. This can occur through newspapers and the Internet, to name a few.

  In the fourth set of definitions, globalization is observed as westernization or modernization. Globalization has been viewed by many scholars as a culture of westernization. For instance, to allow freedom to express individuality is a classic aspect of this culture. This ideology has arguably damaged other pre-existing cultures, as it has become common and further widespread. The final concept of globalization associates with deterritorialization. This can be explained through Giddins’ perspective on this issue. ‘The intensification of worldwide social relations which link distant localities in such a way that local events are shaped by events, occurring many miles away’ (Giddens, 1990:87).  This alters the way we consider locality, and how now, a location can affect the events of another.

  From the foregoing, a general concept of globalization can be stated as the spread and connectedness of production, communication and technologies across the world. That spread also entails the inter-lacing of economic and cultural activity. Crudely, globalization is the ‘process enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communication’ (Hirst et al, 1999: 14). In this sense, globalization is seen as a phenomenon which is becoming the dominant character of the world’s political, cultural, economic and natural environments (Kellner, 1997). This introduction has attempted to prepare for the discussion, in the rest of the essay by exploring the origin and meaning of the term, globalization.

Methodology

  The objective of this essay is to explore to what extent to which the motor industry in China have been actively involved in responding, adapting and shaping not just the global car industry, but also globalization. At the start of the paper, there is an examination of the different school’s of thought, to introduce the main arguments, in globalization. The second part of the paper illustrates the influence of Transnational Corporations (TNCs) have on the globalized economy. After, this the paper moves onto the developments that have occurred in the modern global motor industry, and the impact of lean production. The fourth section of the paper, examines China, with respect to the motor industry, and how developments in this country explain what is happening in the world today. Although, globalization has been the focus of much economic commentary, we are seeing signs of counter-trends that may slow or even reverse the globalization phenomena. This is the main concern of penultimate section. The information contained in this paper has been gathered from various secondary sources including books, journals, newspapers and articles from the Internet. The final part of this paper draws some conclusions, taking into account the content examined.

Globalization- The Key Perspectives

  The starting point for this discussion is the long-standing controversy about how individuals from certain circles interpret globalization. The impact of globalization of globalization is universal regardless of nationality, the development and political ideology of a country. Hence, it is vital to review the main discourses of globalization before examining the China’s automobile industry. The globalization discourses, in light of Held, McGrew, Goldblatt and Perraton can be identified as the hyper -globalist, the sceptical and the transformationlist views. Recently, a new stance on globalization has entered the debate; the internationalist. These explain the conceptual space of the current quarrel of globalization.

Hyper-globalists

  Firstly, hyper-globalists argue that globalization is the existence of a single global economy through integration (Ohmae, 1990). According to them, national states, have lose their importance and as a result have lost their sovereignty. Sovereignty is the ‘right to exercise within a territory, the functions of a state, exclusive of any other state and subject to no authority’ (Foreign Policy,2002:56).The reason being is that even if politics can affect local and national aspects of life, no single nation can affect the changes of the global economy alone. As a consequence, globalization has resulted in a ‘hollowing of the state.’ Moreover, according to the hyper-globalist view, the enhancement of the global economy, the introduction of global governance institutions and the dampened necessity of the role of the state, has sparked a new global age. One which, hyper-globalists judge to be irreversible. The developments in electronic communication, such as mobile phones and the Internet, foster yet another idea of the global economy. Due to the enhanced speed of communication presently, and the ability of people to read about, spread and react to global news rapidly, this has forced us to become more involved with one another from countries. (Held et al, 1999).The Internet is so beneficial because physical distance is now less of a hindrance to people, as well as interest and minority groups can now influence decision-making as there voice can be heard. This notion of the use of the Internet and communication is described as a ‘global village’ (Ge, 2009).

 

The Sceptics

 As opposed to the views of hyper-globalists, the sceptics hold that globalization is a myth. They argue that nothing is really new, and dismiss the idea of a global economy. There stance is that the world is breaking up into several trading blocs, and that the world economy is going through ‘regionalisation.’ The world is leading towards a division within the conditions of the world, rather than coming together as a single and global civilisation. Globalization has set off disputes among the different cultures, civilizations and regions instead of providing integration. For instance, the popular American sitcom ‘Friends’ is now being shown in twenty different languages. Cultural imperialism is defined as the ‘practise of promoting or artificially injecting the culture of one culture into another’ (Romer, 1986:35). They argue that the cultural values of the West are being forced upon countries around the globe, homogenising influences of globalization, and destroying ‘pre-existent cultures,’ in the process (Ritzer, 1993: 10).

 The sceptics consider globalization has raised inequality between the rich and the poor. ‘Nearly 40% of the world’s population live on less then $2 a day’  (World Bank Research, 2002:27).Opponents argue that globalization merely helps developed nations such as the U.S, because they are able to exploit the little resistance on trade barriers and low tariffs, to import goods from developing countries. This violates egalitarian values, and damages a sense of fairness and the chance of every nation to get ahead. Due to the lack of protections, companies from industrialised nations are able to offer workers enough cash to influence them to endure long hours in possibly hazardous working conditions. The average income of the South has fallen by 50% of that of the North, from 195 to 2007 (Sen, 2002).Many commentators have celebrated globalization as an occasion of unprecedented democratisation. Electronic communications have given citizens access to unprecedented amounts of information at unprecedented speeds. On notions of electronic democracy, sceptics have emphasized that only a minority of the world’s population has had access to the Internet (Stewart, 1992).

An Intermediate way: The Transformationlist

  Unlike hyper-globalists and sceptics, transformationalists acknowledge that we are witnessing new kinds of developments that have induced many possibilities as well as challenges. Transformationlists do agree that globalization has and will affect the world, but they are against the hyper-globalists declaration, and that they deem that there is scope for the nation state to retain power of policy decision-making (Castells,2001). Nations do still have the capacity to influence trading patterns. To tackle inequality, supporters argue that globalization can be harnessed by main trading countries such as the U.S. for example to help weaker nations to develop economic stability. (Wrigley, 2005)

  However, in regards to tackling poverty, considering the extent of the issue, co-operation between nation states, is needed and a global effort should be implemented in order to tackle this. For example, the action by G7, which consists of a group of the seven richest nations write off the debt of some of the world’s poorest countries, especially in Africa. This is the kind of action, transformationlist believe is needed, but by more nations making commitments to fight the cause (Freyssent et al, 2008).Proponents of this position advocate that globalization is not either inevitable or fixed, it has occurred through events in the social, political and economical agenda, that have shaped the development of modern society. The transformationalists argue that globalization is creating new economic, political and social circumstances which, however unevenly, are serving to transform state powers and the context in which states operate. They do not predict the outcome - indeed, they believe it is uncertain - but argue that politics is no longer, and can no longer simply be, based on nation-states (Gee et al, 1999).

The Internationalist

  This perspective is has recently been introduced, but it’s not a new phenomenon. Supporter’s state that international trade flows and cultural exchanges are well established and respective nations have a major role to play in the current climate. The nation state still formulates its own economic policy, regardless of economic activity elsewhere. Moreover agreements between nations are bi-lateral, meaning the ‘political and cultural relations between two states’ (Alcock, 2003: 45) are still essential nowadays, despite the increase in multi-lateral agreements, through governance institutions such as EU (European Union). They also believe that Multi-National Corporations (MNCs) retain their businesses in their own home nation, as a sign of loyalty (Beck, 1999). There is some value to suggest that profits made in factories and plants in foreign countries, gets attracted back to the country, the firm has originated from. The Internationalist perspective do have some value, as during in times of a recession or an economic slump of some, nations tend to look inward at their own problems and challenges, without taking consideration of what is happening elsewhere (Damoense,2005).

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General Impact of Transnational Corporations (TNCs)

  One of the most common phenomena regarding the driving force of globalisation is the rapid rise of economic and political significance of retail transnational corporations (TNCs) which has brought them into the spotlight of public attention since the mid-1990s. Before proceeding further, it is crucial to recognise the impact and scope of contemporary retail TNCs.  

  It is often claimed that increasing mobility, an important aspect of globalisation, has reduced the ability of governments to implement policies that constrain the activities of TNCs within their jurisdictions. This view is widespread amongst ...

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