Are economists failing to analyse the cross-border activities of firms because of adherence to outmoded, state-centred forms of analysis? Can the global production network (GPN) framework help us learn more about the dynamics of global organisation of production? Could this lead to new regulation and competition policies better suited to the task of economic development in a global era?

A paper from the University of Manchester’s Centre on Regulation and Competition outlines a framework for the analysis of economic integration and its relation to the asymmetries of economic and social development. Critiques of various ‘chain’ and ‘network’ concepts highlight the need for a better unit of analysis: the global production network (GPN). An assessment of how the GPN perspective can identify prospects for industrial upgrading – or lack of them – in the developing world is accompanied by discussion of the implications for competition policy and regulatory regimes.

The report argues that the firm as a development actor has been misunderstood and often treated as if it were a ‘black box’ without contextualisation. There has been insufficient empirical research either on the organisational dynamics of the subsidiaries of transnational corporations as they emerge and evolve or on domestic firms. A continued fixation on the national state as the unit of analysis ignores economic transformations cutting across, while still being unevenly contained within, state boundaries.

In order to understand the dynamics of development in a given place we must instead understand how places are being transformed by flows of capital, labour, knowledge and power and how the institutional and social fabrics associated with places are transforming those flows as they locate in place-specific domains.

Evidence that the GPN perspective may be suited to meeting current research needs is presented in the report. With regard to future research agendas, the report argues that:

• Understanding and harnessing ‘globalisation on the ground’ requires a new form of knowledge-base.
• Regulation needs to be seen not only in terms of regulating the practices of particular sectors or industries but also of policies that bear on questions of redistribution.
• When it is recognised that absorbtion into GPNs is likely to make worse existing forms of uneven development, regulatory policies must have strong redistributional elements if territorially-specific humanitarian problems and social conflict are to be avoided.
• We not only need to comprehend globalisation as a real phenomenon but also grasp the reality that in order to study development in its many forms we need to focus on the dynamic connections between developed and developing countries, not merely continue to look only at the developing countries themselves.

Source(s):
‘Globalisation on the ground: global production networks, competition, regulation and economic development’, Working Paper No. 38, Centre on Regulation and Competition, Institute for Development Policy and Management, University of Manchester, by Jeffrey Henderson, December 2002 Full document.
ESRC Global Production Networks Project, University of Manchester Full document.

Funded by: Department for International Development, UK

id21 Research Highlight: 9 September 2003

Further Information:
Jeffrey Henderson
Centre on Regulation and Competition
Institute for Development Policy and Management
University of Manchester
Harold Hankins Building
Precinct Centre
Booth Street West
Manchester M13 9QH
UK

Tel: +44 (0)161 275 2798
Fax: +44 (0)161 275 0808
Contact the contributor: Jeffrey.henderson@man.ac.uk

Centre on Regulation and Competition, University of Manchester, UK

Other related links:
'1997 Global Economic Prospects and the Developing Countries' from the World Bank

'Unpacking regulation: too many cooks in the kitchen?'

'Privatisation in Africa: promoting local enterprise?'

'From populist democracy to rule-based regulation: regulatory regimes in Brazil'

'Efficiency or equality? Dilemmas of regulation and competition policy in South Africa'