The practice of trading and bartering of commodities has been around since the beginning of time. The concept of commodity chains was developed by Terence Hopkins and Immanuel Wallerstein in an attempt to understand the spread of capitalism and economic change. (Bair & Werner, 2011) The emergence of capitalism has brought about an anthropogenic phenomenon know as globalization as a means to create profit and in doing so altered competitive dynamics (Gereffi 1999). Globalisation of economies has lead to the construction of chains of production, distribution and consumption transcending borders across the world. Gereffi (1994) identified these chains as Global Commodity Chains, using them as a method to analyze the global economy.
Gereffi (1994), a key author in this area of research, defined Global Commodity Chains as; ‘sets of interorganisational networks clustered around one commodity or product linking households, enterprises and sates to one another within the world economy”. This global interconnectedness rose out of commodity chains that out sourced some of their production to other countries as a way of reducing costs and gaining. Commodity chains refer to the whole range of design, production and marketing of a product. (Gereffi 1999) Gereffi (1994) identified three key characteristics of Global Commodity Chains; they have a specific input to output link production chain, a geography in the sense that various activities are located in different places and there is a governance structure determining the power relationships within the chain.
Gereffi (1999) further identified two distinct types of Global Commodity Chains based on this governance structure; producer driven and buyer driven. The governance and power structur...
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...s particularly evident in Ireland where attractive tax regulations have lead to the influx of American technological companies. Finally there is little attention given to geographical scale within Gereffi’s model. Yes, geography of commodities is recognized on a global scale but the approach neglects the formation of regional and sub-national chains in order to support the larger global chains. (Smith et al 2002)
Gereffi’s more recent research with Joonkoo (2005) sees the evolution of the Global Commodity Chains approach into the theory of Global Value Chains. This new approach encompasses much of Smith et al’s criticisms of Global Commodity Chains. The new theory links the concept of value in chains with the global organization of industries. It incorporates governance as a key influence on the chain and sees the hybridization of producer and buyer driven chains.
As part of its vertical integration, ExxonMobil has many retail operations worldwide. Consequently, it can sell a large volume of products in growing and developed markets across continents, hence maintain high levels of profits. The institution has expanded its sales by venturing into new regions globally (Dravenstott & Chieffe, 2011). Moreover, with the growing economy and demand for energy, it has enhanced the efforts to ensure that the needs of the world are
This section summarizes conceptual issues from Global value chain (GVCs) literatures that are relevant to paper’s objectives. It provides the overview of global value chain theory, and the most important concepts.
Sraffa, P. (1960). Production of Commodities by means of Commodities: Prelude to a Critique of Economic Theory. Cambridge University Press, Cambridge.
Throughout the chapters assigned, Dicken focuses on the patterns and processes of global shifts, on the forms produced by the globalization of economic activities and on the forces producing those forms. He builds his arguments around three interconnected processes, which in his view are the reasons for reshaping the global economic map. Those are Transnational Corporations (“TNC”), States, and Technology.
Many historians and sociologists have identified a transformation in the economic processes of the world and society in recent times. There has been an extensive increase in developments in technology and the economy as a whole in the twentieth century. Globalization has been recognized as a new age in which the world has developed into what Giddens identifies to be a “single social system” (Anthony Giddens: 1993 ‘Sociology’ pg 528), due to the rise of interdependence of various countries on one another, therefore affecting practically everyone within society.
The movement particularly emphasizes on exports from developing countries to developed countries, with products such as handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate, flowers and gold. Moreover, coffee is one of the most widely traded goods in the world. For many developing countries, coffee trade is an important source of income. Producers can provide a better trading and improve terms of trade. Moreover, this allows producers to improve workers’ living environment and future life in general (De Pelsmacker, Driessen and Rayp, 2005).
In order for international trade to work well, governments must allow the world market to determine how goods are sold, manufactured and traded for all to economically prosper. While all nations may have the capability to produce any goods or services needed by their population, it is not possible for all nations to have a comparative advantage for producing a good due to natural resources of the country or other available resources needed to produce a good or service. The example of trading among states comprising the United States is an example of how free trade works best without the interve...
Following the Great Recession, the world has been facing complex global transformations. Dani Rodrik’s “The Globalization Paradox: Democracy and the Future of the World Economy” portrays the challenges of the implications that our current model of globalization relies upon. Rodrik’s work reveals both the implications and connections of the relationships between markets, the states, and globalization in the currently changing world. Throughout the book, Rodrik argues the validity of five key points: markets require regulatory institutions, such institutions take on a variety of forms, societies should orient their market-supporting institutions to their own unique needs, markets that are responsive to democracy can avoid institutional convergence, and a world that is responsive to democracy will not reach full globalization. This book has made me question the long term sustainability of the already evolving economic globalization process. Rodrik explains that the process of globalization must be managed so that the entire world can benefit.
An outstanding mechanism frequently used to interpret ‘Globalization’ is the ‘World Economy’. Back to the colonial age, the coinstantaneous behaviors of worldwide capitals and energy resources flowed from colonies to western countries has been regarded as the rudiment of the economic geography (Jürgen and Niles, 2005). Nowadays, the global economy was dominated by transnational corporations and banking institutions mostly located in developed countries. However, it is apparently that countries with higher level of comprehensive national strength are eager for a bigger market to dump surplus domestic produce and allocate energy resources in a global scale, thus leads to a world economic integration. This module was supported by several historical globalists (Paul Hirst, Grahame Thompson and Deepak Nayyer) ‘their position is that globalization is nothing new but more fashionable and exaggerate, a tremendous amount of internationalization of money and trade in earlier periods is hardly less than today.’ (Frans J Schuurman 2001:64).
In the era of globalization and international trade, global value chains (GVCs) have emerged as an important avenue for economic development especially for developing countries. GVCs allow small companies, and enterprises in low income countries to take part in the increasingly integrated global economy. A value chain refers to the range of processes involved in making a product including its conception, creation, distribution etc. and, the same process, when conducted amongst firms on an international level is considered a global value chain (Gereffi and Fernandez-Stark 4). The framework of GVCs is very detailed - it allows us to understand the complex processes and intricate procedures for production in global industries and the role various
...rimary products being resourced from one place, secondary product in another place and tertiary product resourced from elsewhere thereby profoundly changing the world trade with increasing polarisation towards free flow of labour, capital and commodities.
• Globalization is making worldwide supply chains and subsequently physical separation is expanding between an organization and its suppliers and an organization and its clients.
The expression "globalization" is generally utilized as a part of business rings and matters of trade and profit to depict the expanding internationalization of businesses for merchandise and administrations, the budgetary framework, companies and commercial ventures, innovation, and rivalry. In the globalized economy, partitions and national points of confinement have liberally diminished with the departure of tangles to market access. Furthermore, there have been decreases in transaction expenses and layering of time and separation in global transactions.
Commodity is a fundamental item used by almost everyone. In the past, tea, tobacco, salt, sugar are considered as commodities. People use these commodities to exchange goods. T...
Stonehouse, G., Campbell, D., Hamill, J. & Purdie, T. (2004). Global and Transnational Business (2nd ed.). Chichester: John Wiley & Sons.