Firm in Homeserve foreign markets / source from abroad?
Stay domestic
Export
Export or local production?
Import or local production?
ImportMultinational activity:
horizontalMultinational activity:
vertical
no
yes, serve foreign market
yes, source from abroad
exportlocal
productionimportlocal
production
Part I Introduction
Part IIFirms, trade, and location
Part IIICapital, currency,and crises
Part IV Consequences of globalization Economic consequences
Figure I Firm decision tree and book overview
Data sources: Louis Henri Fournet (1998) and the website http://www.nasa.gov, ‘A baby picture of the universe tells its age’, 11 February 2003.
big bang
first stars
beginning of our galaxy beginning of our solar system
beginning of the geologic erasoldest know n fossil
beginning of photosynthesisend of precambrian era
end of primary era
present time13.7 billion years
10 billion years
200 million years
200 million years
800 million years
5 billion years3.5 billion years
3 billion years
2 billion years
Figure 1.1 ‘Big Bang’ and beyond
Figure 1.2 Development of world population over the last 2,500 years
170 265425
7000
0
1000
2000
3000
4000
5000
6000
7000
-500 0 500 1000 1500 2000year
po
pu
latio
n (
mill
ion
)
Mongol invasions
Black death
30 years war, Ming collapse
Data sources: Kremer (1993, table 1) and UN Population Division World Population Prospects: The 2010 Revision.
0
2
4
6
8
10
1900 1940 1980 2020 2060 2100year
wor
ld p
opul
atio
n (b
illio
n)
Figure 1.3 Development in world population, UN projection to 2100
Data source: UN Population Division World Population Prospects: The 2010 Revision, medium variant
Figure 1.4 GDP and GNP, current $, 2010
10
100
1,000
10,000
100,000
10 100 1,000 10,000 100,000
GDP (current US $, bn)
GN
I (c
urre
nt U
S $
, bn
)
USA
China
Germany
Japan
Luxembourg
Data source: World Bank Development Indicators Online; data are for 167 countries; the thin line is a 45° line; bubbles proportional to size of GDP; double logarithmic scales.
100
1,000
10,000
100,000
100 1,000 10,000 100,000current US $
PP
P in
tern
atio
nal $
Figure 1.5 Correction of GDP per capita for purchasing power, 2010
Data source: World Bank Development Indicators Online.
467 453566
666
7614
100
1,000
10,000
0 500 1000 1500 2000year
Wor
ld G
DP
per
cap
itaFigure 1.6 Development of world per capita income over the last 2,000 years, logarithmic graph
Data source: Maddison Historical Statistics 1-2008 AD; 1990 international Geary-Khamis dollars
Logarithmic graphs
1
10
100
1,000
10,000
1950 1960 1970 1980 1990 2000
A1
A3
B1
B2
B3
C1 C3
Figure 1.7 Advantages and disadvantages of logarithmic graphs
400
200
-400
-200
1 1000 15001600 1700 1800 1900 2000
% above world average(world = 100)
% below world average (country = 100)
ItalyIranIraq
Italy
UKNetherlands
Switzerland
USAAustralia
Many Many
Western
Offshoots
Australia
New
Zealand
New
Zealand
Western
Offshoots
Other
Africa
China
India
Iraq
Figure 1.8 Leaders and laggards in GDP per capita: a widening perspective
Data source: Maddison Historical Statistics 1-2008 AD; deviation relative to world index = 100 for positive and country index = 100 for negative deviations.
Carrying capacity of merchant fleets, 1470-1780
0
200,000
400,000
600,000
800,000
1,000,000
1470 1570 1670 1780
Netherlands Germany Britain France Italy, Portugal, Spain
Figure 1.9 Carrying capacity of European merchant fleets, 1470–1780, metric tons
Data source: Maddison (2001, p. 77); absence of a bar in a year for a particular country /group indicates that no data are available.
Figure 1.10 Two ‘waves’ of globalization, merchandise exports, per cent of GDP
Merchandise exports, % of GDP
4.6
22.8
2.5
11.3
18.7
0
5
10
15
20
25
1870 1890 1910 1930 1950 1970 1990 2010
World USA Japan
Data sources: Maddison (2001, table F-5) in constant 1990 prices, extended to 2010 using WTO International Trade Statistics and World Development Indicators Online.
Figure 1.11 Trade and market integration
price
quantity
A
Home import demand
Foreign export supply
BC
1
1
1
2
paF
pbH
paH
pbF
pc
qa qb qc
price
quantity
A
Home import demand
Foreign export supply
BC
1
1
1
2
paF
pbH
paH
pbF
pc
qa qb qc
Figure 1.12 London external bond spread, 1870–1940, fourteen core and empire bonds
1870 1910 1920 1930 19401890 19001880-10
-5
0
5
10
1870 1910 1920 1930 19401890 19001880-10
-5
0
5
10
Source: Based on Obstfeld and Taylor (2003); the units are percentage points.
Figure 1.13 Foreign capital stocks; assets/world GDP, 1860–2000
0.6
0.4
0.2
01860 1880 1900 19601920 1940 1980 2000
Foreign capital stocks; assets / world GDP0.6
0.4
0.2
01860 1880 1900 19601920 1940 1980 2000
Foreign capital stocks; assets / world GDP
Source: Based on Obstfeld and Taylor (2003).
Figure 1.14 Relative migration flows, Western Europe and Western Offshoots, 1870–2010, per 1,000 inhabitants
-2
0
2
4
6
1870-1913 1914-1949 1950-1973 1974-1998 2000-2010
Western Europe Western Offshoots
Data sources: Net migration in the period (Maddison, 2001, table 3-4) is divided by the (simple) average population and length of the period, normalized per 1,000 inhabitants; updated for the period 2000-2010 with data from UN Population Division, Migration Section; Western Europe consists of Belgium, France, Germany, Italy, Netherlands, Norway, Sweden, Switzerland, and UK.
Figure 1.15 Traditional and globalized fragmented production processes
production block
country Afirm 1
inputs markets
production block 1
country Afirm 1
inputs
markets
production block 4
country Afirm 1
production block 3
country Cfirm 2
production block 2
country Bfirm 1
inputsinputs
inputs
I. traditional production process
II. globalized fragmented production process
service link
service link
service link
service link
production block
country Afirm 1
inputs markets
production block 1
country Afirm 1
inputs
markets
production block 4
country Afirm 1
production block 3
country Cfirm 2
production block 2
country Bfirm 1
inputsinputs
inputs
I. traditional production process
II. globalized fragmented production process
service link
service link
service link
service link