B-01
Trading Places: The Role of Asian and Latin American Capitalisms in the Reshaping of the Global Economy.
Trading Places: the role of Asian and Latin American capitalisms in the reshaping of the global economy
Glenn Morgan, Gerald McDermott and Heike Doering
In the last three decades, a profound restructuring of the global economy has occurred. Up to the 1980s, flows of foreign direct investment occurred primarily between the Western industrialised economies. The largest manufacturing multinationals in the world, their headquarters and subsidiaries were primarily based in these economies (plus Japan) which reflected where the bulk of consumer markets existed. Science and technological innovation were also centred on these contexts and international knowledge transfer was limited. Most of these economies had also built up production systems based on strong labour representation, employment rights, and influence over the organization of work, on stable male employment in the larger firms, and on wage systems that provided most employees with annual increases and welfare benefits that provided a ‘safety net’. The influence of most shareholders was relatively limited in the largest firms and tempered to varying degrees by legislation and regulation. States sought to manage the tensions within these societies by varying the balance of regulation and welfare in ways that sustained a stable and advantageous position for home based firms in the international division of labour. Periodic devaluations of currencies facilitated escape routes for those countries and for firms that could not sustain their competitiveness against others on global markets, though this was often at the expense of creating inflation and generating disruptive distributional struggles that further undermined competitiveness. The developing world was mostly connected to this dynamic as providers of agricultural and mineral primary resources and/or as second or third tier consumer markets for the products of the industrialised economies, a position of dependence and subordination for much of the period.
These patterns have changed since the 1980s. The deregulation of capital flows and the search for new markets has led to major expansions in foreign investment into overseas financial markets and FDI and offshoring and subcontracting production into emerging economies. In turn emerging economies have become more significant markets for MNCs and have started to engage in their own OFDI with their own multinationals. A focus on Asia and Latin America offers a unique opportunity to compare and contrast how changes in the nature of capitalism have opened up new possibilities for firms from emerging economies. Does this involve a shift in the dynamics of capitalism away from the West towards the emerging economies? To what degree can emerging economies escape the ‘middle income trap’ and achieve upgrading at the level of individual skills, firm capabilities, and institutional innovations? By confronting examples of these processes from Asian and Latin American contexts, what is revealed about the role of economic and political elites, of state structures, of educational training and sciences systems, of international and national financial systems, of transnational social movements and of the role of local and multinational capital in shaping the possibilities for firms from these countries taking new positions in the global division of labour?