Review: China’s development

1. Review: China’s development 1 • Dependency perspective on China • China defeated by imperial powers • Opium Wars, Sino-Japanese War, Japanese invasion • Forced into global economy in subordinate position • Development “externally conditioned”

2. Review: China’s development • Statist perspective on China—response to backwardness • Planned economy • Like Soviet Union • Extreme role for state in economy • No role for private enterprise or market forces • UNlike Japan • State “guides” private firms operating in market • Reform era • Both state and private enterprises exist • More like Japan • State “guides” firms operating in market

3. Review: China’s development 3 • Neo-liberal perspective on China • Economic reform • Introducing market forces spurs economic growth • China’s gradualism—note continued role of state • Active state intervention in economy • Some state-owned enterprises • Contrast Russia’s “shock therapy”

4. Global Commodity Chains and Labor “China Blue” Odegaard Media Center

5. Global Commodity Chain Analysis:Roots in Dependency and World Systems Theory Dependency World Systems Core Core Periphery Semi-periphery Periphery Global commodity chain studies draw on the insights of dependency/world systems theory

6. Global Commodity Chains 6 • Distinguish • Producer-driven commodity chains • Examples?

7. Global Commodity Chains • Distinguish • Producer-driven commodity chains • Exs: automobiles (GM, Toyota), aircraft (Boeing, Airbus), electrical equipment • Capital, technology intensive • Core multinational corporations invest directly

8. Global Commodity Chains 8 • Distinguish • Buyer-driven commodity chains • Examples?

9. Global Commodity Chains • Distinguish • Buyer-driven commodity chains • Exs: apparel (Gap, Levi), shoes (Geoxx), toys (Brio, Disney) • Labor intensive, low technology • Core corporations own trademarks, engage in sub-contracting • “Just-in-time” inventory control • Very short production lead-times • Low barriers to entry in manufacturing  High barriers to entry in design and marketing

10. Global Commodity Chains • What functions take place in the • Core? • Semi-periphery? • Periphery?

11. Where is profit located in the buyer-driven commodity chains? location functiondivision of profits coredesign/marketing$$$$$$  orders, contracts ex’s: Reebok, Nike ~$200/day semi-peripherydirect foreign investment$$$ trade intermediary for low-end mfg’ing quality control, financing, shipping (middle-man role) higher-end mfg’ing ex: Yue Yuen ~ $40/day peripherylow-wage labor$ (paid by middle-man) ex: (working sisters 打工妹） Dongguan 2007 wages ~$3/day

12. What is “triangle manufacturing”?

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14. Sources of Direct Foreign Investment in China

15. Video 15 • http://video.google.com/videoplay?docid=-6733564947664645042# • 5:07-10:33; 20:00-23:30 or 24:00

16. Discussion Topic • Identify several pro’s and con’s associated with “sweatshop labor.” • This question relates to the debate about whether low-wage labor in export processing industries is • “a route out of poverty” • “a race to the bottom” • a result of state repression of labor

17. Competing Theories about Impact of Global Commodity Chains • How to interpret low-wage labor in export-processing? • Neo-liberalism • “Route out of poverty”? • Source of Income, higher than in agriculture • Driven by market forces (neo-liberal) • http://web.mit.edu/krugman/www/smokey.html • Dependency • “Race to the bottom”? •  “Santa’s Workshop” video • Driven by multi-national corporations (dependency) • Statism • Result of state labor repression • Labor unions repressed • Labor regulations NOT enforced

18. In Praise of Cheap LaborBy Paul Krugman (Neo- liberal view) • Bad jobs at bad wages are better than no jobs at all. • “While wages and working conditions in the new export industries of the Third World are appalling, they are a big improvement over the "previous, less visible rural poverty."

19. In Praise of Cheap LaborBy Paul Krugman (Neo- liberal view) • “Wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people. • “Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move. • “More importantly, however, the growth of has a ripple effect throughout the economy.

20. In Praise of Cheap LaborBy Paul Krugman (Neo- liberal view) • “As long as you have no realistic alternative to industrialization based on low wages, to oppose it means that you are willing to deny desperately poor people the best chance they have of progress for the sake of what amounts to an aesthetic standard --that is, the fact that you don't like the idea of workers being paid a pittance to supply rich Westerners with fashion items.”

21. Is low-wage labor in export-processing factories a…“Route out of poverty?” (Neo-liberal view) • “route out of poverty”? • Market forces • Higher paying job opportunities for rural surplus labor • Labor remittances important source of capital • “China Blue” & “Working Sister” • Open small business • Help pay for sibling education • Dowry—more independence in choice of marriage partner “Working Sister” Odegaard Media Center

22. Is low-wage labor in export-processing factories a… “Race to the bottom?” (Dependency view) • “Race to the bottom?” • Multinational capitalism exploits • Exploits labor with low wages • Creates abusive working conditions

23. Is low-wage labor in export-processing factories a… result of state repression”? (Statist view—predatory) 23 • State repression of labor • Labor regulations not enforced • Independent trade unions prohibited

24. Competing Theories about Impact of Global Commodity Chains 24 • Theory is a simplification of very complex reality. • There is more than one way to simplify. • Different theories highlight different aspects of reality. • Analysts can look at the very same empirical reality in different ways. • Which theory is “right”? • Look at the evidence • Which theory can make sense of the most data (evidence)?