This chapter addresses the globalization of production. Although companies have been investing abroad for centuries, the most recent era of globalization has created an unprecedented range of possibilities for global firms to reorganize and relocate their activities. The chapter analyses how advances in transportation and technology allow a firm to divide up a global value chain — the sequence of activities that lead to the production of a particular good or service — and how these decisions create new opportunities and challenges for both companies and the societies within which they operate. It first reviews the rise of global production and the forces that have led to dramatic increases in foreign direct investment (FDI) and outsourcing. The central questions for any firm involved in global production involves how to govern the value chain and where to locate different activities. The chapter then provides a framework for understanding these issues and the implications of the various choices. It also applies these concepts to the case of East Asia, particularly China.
David L. Richards and Ronald D. Gelleny
This chapter investigates the relationship between economic globalization and government respect for two subcategories of international human rights known as physical integrity rights and empowerment rights. It begins with an overview of different theoretical approaches regarding the relationship between economic globalization and government respect for human rights. It then reviews research findings from the quantitative literature analysing this relationship. It also conducts an original study using quantitative methods to determine whether a developing country's ability to attract foreign direct investment is affected by its level of governmental respect for human rights. The results show that governments that respect their citizens' physical integrity and empowerment rights will be better able to attract foreign economic capital.
This chapter examines the role of developing countries in the contemporary global economy. It first provides an overview of trends in the global economy, taking into account the implications of globalization for the developing world and the question of free trade vs protectionism. It then considers three key features of an increasingly globalized economy and their significance for the developing world: trade, foreign direct investment (FDI), and financial flows. It also discusses the role(s) of developing countries in global trade, the advantages and disadvantages of FDI, and two major components of the global economy that can cause serious economic disruptions: the buying and selling of currencies and stocks and shares in local economies, and the rapid movement of capital across borders. The chapter concludes with an assessment of factors that can reduce the economic well-being of countries in the developing world.