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Transborder clusters as a means to enhance competitiveness: the transformation of a quasi cluster in N. Greece to a quasi cluster that embraces Southern Balkans Lois Labrianidis Economic Geographer, Professor Dept of Economics, University of Macedonia
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Transborder clusters as a means to enhance competitiveness: the transformation of a quasi cluster in N. Greece to a quasi cluster that embraces Southern Balkans Lois Labrianidis Economic Geographer, Professor Dept of Economics, University of Macedonia DIME-LIFE Conference 30/11- 1/12/06 Athens
Changesof Global Inward FDI, imports and GDP 1970-2003 (1970=100), current prices Πηγή: UNCTAD FDI database online
Participation of under-developed countries in the global stocks of FDI inflows and outflows, 1980-2004 Πηγή: UNCTAD FDI database online
Distribution of global value-added in manufacturing between the developed and the under-developed countries, 1953-2001 Πηγή : Για τα έτη 1953-1980 Dicken P. (1998) ‘Global Shift: Transforming the World Economy’, London: Paul Chapman, σελ. 93. Για τα έτη 1990-2001 World Bank, WDI online
Development of the per capita outward FDI stocks of Greece, the developed and the under-developed countries, 1980-2004 Πηγή: UNCTAD FDI Database
Why this acceleration in the global integration in the clothing industry 1st General changes, not industry specific: -globalisation (Held 1995) -that has been enhanced by advances in technology (Castells 1996) -especiallytelecommunications, transportation, IT (Lash and Urry 1994), -made the world smaller (Harvey 1982) - extending the reach of people+businesses over space (Giddens 1990). • - predominance of neo-liberal ideology prioritising free market over state regulation,interests of global over national capital, ofcapital over labour (Hirst and Thompson 1996, Jessop 2002) 2nd relative ease of global integration of clothing industry due to low entry barriers, low capital and skills requirements, labour intensive (60% of total costs - Scheffer 1994; OECD 2004)easy delocalisation to countries with cheap, flexible labour (Phizacklea 1990, Hanzl-Weiss 2004) 3rd rise of global buyers: such as retailers, branders, marketers (Gererffi 1994; Smith et al. 2002)
Clothing is the paramount global commodity has some of the highest levels of: - import penetration - volume of trade - degree of supply chain internationalisation Trade in clothing is among the oldest in the world, since 1960s there has been a dramatic increase of interdependence in production +consumption Geographic shifts in clothing production -In 1960sfrom W. Europe + US Japan - In 1970s-1980s: from W. Europe Southern Europe (Greece etc), from Japan Hong Kong, South Korea, Singapore, Taiwan -In late 1980s from W. Europe further east in Europe, • from US L. America, Caribbean, mainland China, Sri Lanka other Southeast Asian countries (Gerefffi and Memedovic, 2003) - In 1990s South Asian and N. African suppliers were added (Gibbon, 2001), while the significance of L. America, E. Europe, Turkey and recently the Middle East increased (Scheffer 1994, Kessler 1999, Begg, Smith& Pickles 2003, Gereffi and Memedovic 2003).
There is a quasi cluster of garment textile manufacturing in N. Greece since the ‘60s (Greece low levels of trust. Levels of trust differ across countries as well as regions and sectors– Welter +Smallbone, 2006) • This quasi cluster since the early ’90s transcends national boundaries (other e.g. Medicon Valley –Copenhagen/Skane Sweden) • The identity of the entrepreneur is shaped by his role in cross-border transaction: - international commuting - Entrepreneur that leaves in his ivory tower (draw parallel with “cathedrals in the desert” parachute industries”)
Cross-border entrepreneurial activities in Eastern Europe • Entrepreneurs involved in cross-border activities face continuous challenges and transformation regarding their identities and their behavior - To understand these transformations we need to overcome popular beliefs claiming the revival of past identities (“deep freeze theory”) • Entrepreneurial cross-border activities are to a great extent based on informal networks and do not exclusively aim on long-term capital accumulation. Such activities may also cover symbolic and material consumption needs - were initially based on petty trade and household enterprises - presently involve a special kind of postsocialist elites called “the cell and Mercedes people”
Textile and clothing companies that have relocated in part to the Balkans are doing much better in every respect compared to those that have not relocated
Development of the company’s sales, production and employment (F Company)
Theories , typologies of delocalisation: some preliminary thoughts • A firm (e.g. a Greek firm) can either undertake and/ or give subcontracting, while at the same time being a parent of a firm in the Balkans (the typical case of Greek MNEs), or an affiliate of a developed country firm . • What is then, the defining feature of the internationalisation process? • Different theories would have different predictions about what actually determines why, when and where (to mention only some of the questions) firms internationalise • Extant theories • Supply chain theory(Gereffi) • Internalization theory (Buckley) • Ownership advantages (Hymer) • Resource based theory (Penrose) • Divide and rule theory (Peoples)
Supply chain theory The testable hypothesis here could be whether firms organising the supply chain (their ‘own’ network of subcontractors or affiliates) would behave in different ways and be able to better defend their positions in the market than firms that are parts of a supply chain organised by another (e.g. a W. European firm). • Internalisation theory Are firms which are part of a MNE (either as parents or affiliates) better endowed with the knowledge and information freely flowing within the MNE network, to mention only one of the benefits stemming from being part of a multinational firm. • Ownership advantages It is not clear whether labour intensive firms must have specific ownership advantages, which they must exploit themselves in order to become multinational.
Resource based theory For many firms, delocalisation (especially FDI) was easy, since it was possible through the utilisation of the firms’ existing resources. In a sense, therefore, FDI does not represent an expansion of the firm, but rather a reconfiguration. For many firms FDI was not the daunting challenge we often think it is but the best solution in the choice between perishing, upgrading or delocalising. • Did firms acquire more resources prior to internationalising? • Is internationalisation one of the stages of the growth of a firm, or simply a survival strategy? • Divide and rule Labour considerations are of primary importance to labour-intensive firms. Do the firms use delocalisation as a possible threat in order to squeeze labour costs in their home markets?
