Chapter 2

Changing Geographies of the Global Economy

Review

• Concepts to Review– Globalization, core−periphery economic

geography

• Key Words– Geographies of globalization, FDI, volatility

of economic growth, transnational corporations, global cities

Global Division of Labour

• Over 300 years, a global division of labour developed, with a core−periphery configuration

• Manufacturing concentrated in the core, with exports and imports to/from periphery

• WWII: destruction of extant manufacturing capacity, and development of new technologies

• Post-war division:– Capitalist ‘West’ dominated by the US– Communist ‘East’– ‘Third World’

• Post-Cold-War developments: the re-emergence of Asia as the world’s most dynamic economic region

Global Interconnectedness

• Two important features of the global economy since 1950:

– Increased volatility of economic growth– Growing interconnectedness

• Current trends:– Variation between countries in trade integration

terms– Major indicator of growing interconnectedness: the

fact that the growth of trade has outpaced the growth of output

– Most trade is intra-regional within the three major regions (Europe, North America, Asia), and most exterior trade is between them

FDI and TNCs• FDI– Definition– Importance of FDI to a country’s

economy as a measure of integration

• TNCs– Definition– Significance of intra-firm trade

• Changing patterns of trade and investment

Regional Comparisons

• USA• Europe• Eastern Europe• Asia• Latin America• ‘Global cities’ as nodes in the

networks