03/12/2019
LECTURE 17: DEVELOPED OR ‘OLD WORLD’ REGIONAL
STRATEGIES
TODAYS’ TOPICS TODAYS’ LEARNING OUTCOMES
• The return of the Triad By the end of this session you will be able to:
• The rise of the US, Japan and Europe • Discuss why the Triad (US, EU, Japan) became
• US political economy dominant
• EU political economy • Examine the advantages and disadvantages of
• Japan’s political economy investing in triad political economies
‘OLD WORLD’ ECONOMIES: TRIAD Multinational exist around the
• Power is shifting world, but the biggest ones
• Largest share of MNEs: Deeping integration as regional hubs tend to be found in 3 main
areas (EU, US and Japan)
HOW DID THE TRIAD BECOME SO POWERFUL?
EUROPE'S COLONIAL PAST
• C15-18TH European capitalism and colonialism
• Early industrial revolution and industrialisation
• Extraction and exploitation for growth
• Further industrialisation and development
• Global trade through imperialism - leading to ‘free trade’ connections
We need to start thinking of empires.
What empires did:
1. Trade with people / exchange goods
2. Conquer areas around themselves
3. Developed a network with other empires
US POST-WW2 POWER AND DOMINANCE
• US connected to Europe through the slave trade and later cotton industry
• Large internal labour and natural resources assisted industrialisation
• Free market – European capital and immigration
• Bretton Woods (WTO, IMF GATT) – skewed towards US and dollar standard
• 1950s witnessed full employment and low inflation for 20 years
• Industrial development and R&D
Fixed exchange pegged to $ until 1971
• People migrated from Europe to the US because the US had a free market
• WTO, IMF GATT tried to coordinate the global trade
, JAPAN’S POST-WW2 ECONOMIC MIRACLE
• Became second largest economy to the US by 1960s
• Driven by protectionism and exports
• Policy Concerning Industrial Rationalization (1950) state-industry cooperation
• Restrictions on imports, Japan Development Bank to fund industry
• Emergence of large conglomerates and integration through keiretsu
GLOBAL FIRMS AREN’T NEW…
They are larger, more international – and more of them
• General Motors: moved into Canada in 1918, Vauxhall Motors (UK) in 1925, Opel (Germany) in 1929
• Used post-war US ‘best practice’ in management, production methods, products, and costs
• Significant transfers of technology, products to Europe
• 1990s move to global factory concept
2011 produced in 37 countries, made 9.5m vehicles, revenues over $150bn
TOP 100 TNCs
• Global 100 share
• Japan overtaken by Australia and China
• Changes for the Triad?
• Beware of statistics: this is capitalisation over
‘internationalisation’
• Note the geography of activities (domestic utilities out
exporters in) …
• Foreign sales
• Chinese firms are big, but not international
TRENDS IN THE GLOBAL ECONOMY (TRIAD)
• MNE investment changed significantly after 1992
• Accelerated FDI (1992-2008) x8, unlike world trade at 1.5x times
• Services overtake manufacturing: 49% of world’s FDI (1990) vs 64% (2010), Growth in international
M&A over greenfield approaches
• Increase in Triad offshoring strategies and global value chains
Shift to a service-based economy – response to offshoring
LECTURE 17: DEVELOPED OR ‘OLD WORLD’ REGIONAL
STRATEGIES
TODAYS’ TOPICS TODAYS’ LEARNING OUTCOMES
• The return of the Triad By the end of this session you will be able to:
• The rise of the US, Japan and Europe • Discuss why the Triad (US, EU, Japan) became
• US political economy dominant
• EU political economy • Examine the advantages and disadvantages of
• Japan’s political economy investing in triad political economies
‘OLD WORLD’ ECONOMIES: TRIAD Multinational exist around the
• Power is shifting world, but the biggest ones
• Largest share of MNEs: Deeping integration as regional hubs tend to be found in 3 main
areas (EU, US and Japan)
HOW DID THE TRIAD BECOME SO POWERFUL?
EUROPE'S COLONIAL PAST
• C15-18TH European capitalism and colonialism
• Early industrial revolution and industrialisation
• Extraction and exploitation for growth
• Further industrialisation and development
• Global trade through imperialism - leading to ‘free trade’ connections
We need to start thinking of empires.
What empires did:
1. Trade with people / exchange goods
2. Conquer areas around themselves
3. Developed a network with other empires
US POST-WW2 POWER AND DOMINANCE
• US connected to Europe through the slave trade and later cotton industry
• Large internal labour and natural resources assisted industrialisation
• Free market – European capital and immigration
• Bretton Woods (WTO, IMF GATT) – skewed towards US and dollar standard
• 1950s witnessed full employment and low inflation for 20 years
• Industrial development and R&D
Fixed exchange pegged to $ until 1971
• People migrated from Europe to the US because the US had a free market
• WTO, IMF GATT tried to coordinate the global trade
, JAPAN’S POST-WW2 ECONOMIC MIRACLE
• Became second largest economy to the US by 1960s
• Driven by protectionism and exports
• Policy Concerning Industrial Rationalization (1950) state-industry cooperation
• Restrictions on imports, Japan Development Bank to fund industry
• Emergence of large conglomerates and integration through keiretsu
GLOBAL FIRMS AREN’T NEW…
They are larger, more international – and more of them
• General Motors: moved into Canada in 1918, Vauxhall Motors (UK) in 1925, Opel (Germany) in 1929
• Used post-war US ‘best practice’ in management, production methods, products, and costs
• Significant transfers of technology, products to Europe
• 1990s move to global factory concept
2011 produced in 37 countries, made 9.5m vehicles, revenues over $150bn
TOP 100 TNCs
• Global 100 share
• Japan overtaken by Australia and China
• Changes for the Triad?
• Beware of statistics: this is capitalisation over
‘internationalisation’
• Note the geography of activities (domestic utilities out
exporters in) …
• Foreign sales
• Chinese firms are big, but not international
TRENDS IN THE GLOBAL ECONOMY (TRIAD)
• MNE investment changed significantly after 1992
• Accelerated FDI (1992-2008) x8, unlike world trade at 1.5x times
• Services overtake manufacturing: 49% of world’s FDI (1990) vs 64% (2010), Growth in international
M&A over greenfield approaches
• Increase in Triad offshoring strategies and global value chains
Shift to a service-based economy – response to offshoring
