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Global Production Networks

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Citation for published version (APA): Hess, M. (2018). Global Production Networks. In D. Richardson (Ed.), The International Encyclopedia of : People, the Earth, Environment, and Technology [0675] John & Sons Ltd.

Published in: The International Encyclopedia of Geography

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Download date:27. Sep. 2021 regional development. The following discussion Global production will first present the conceptual foundations of networks GPN 1.0 and 2.0 and their intellectual influ- ences. Subsequent sections will focus in turn on Martin Hess power relations between actors and their impact University of Manchester, UK on governance structures in and of GPNs; the increasing fragmentation of GPNs through In the twenty-first century, the world economy outsourcing and offshoring, driven by, among has seen substantive challenges and changes, not other factors, corporate as well as other forms least the global financial crisis, the ramifications of financialization; the role of labor and labor of which are still being felt around the globe. agency in GPNs; and the dynamic relation- Contemporary economic globalization can be ships between GPNs and regional development. characterized by the increased functional and The entry will conclude with brief reflections geographical fragmentation and reconfiguration on GPNs as politically contested fields and of production processes, deepening outsourc- their “discovery” by policymakers and interna- ing and offshoring, changing of tional organizations as arenas of international production and consumption, and associated governance and developmental “tools.” labor market dynamics including the ascent of temporary and migrant work. These dynamics have become increasingly prevalent with the rise GPNs – conceptual antecedents of neoliberalism and the end of the Cold War, triggering new lines of social sciences inquiry As an analytical framework, the GPN concept into globalization and economic development. has been developed since the late 1990s by a Moving beyond more state-centric approaches group of scholars in economic geography and to economic development studies, approaches international economic sociology, mostly based such as commodity chain research and global at the University of Manchester. It emerged from value chain analysis have been developed to a growing dissatisfaction with existing theories better understand the social and developmental of economic development that operated at either consequences of contemporary capitalism (Bair macro-levels or micro-levels of abstraction and 2005). It is within this context, sharing such thus failed to capture the increasingly complex, a research agenda, that the global production networked nature of economic activities under network (GPN) concept first emerged as an neoliberal globalization and their impacts on analytical framework and heuristic tool (what uneven development at various scales. The is now labeled GPN 1.0) and was subsequently construction of the GPN framework rests on reconceptualized as GPN 2.0 by Coe and Yeung a number of historical precursors. Hess and (2015) into a more strongly focused theoretical Yeung (2006) identified four strands of literature approach to understand the changing nature informing this approach: (i) the 1980s value and dynamics of economic globalization and chain literature associated with the work of

The International Encyclopedia of Geography. Edited by Douglas Richardson, Noel Castree, Michael F. Goodchild, Audrey Kobayashi, Weidong Liu, and Richard A. Marston. © 2018 John Wiley & Sons, Ltd. Published 2018 by John Wiley & Sons, Ltd. DOI: 10.1002/9781118786352.wbieg0675.pub2 GLOBAL PRODUCTION NETWORKS

Michael Porter; (ii) work on networks and structure describing the production process and the social embeddedness of economic activi- associated activities along the chain, from raw ties as developed in economic sociology; (iii) materials to the final product; the territoriality actor-network theory (ANT), which emerged of the GCC, which represents its geographi- in the context of science and technology studies; cal configuration; the governance dimension, and (iv) most notably, the literature on global which denotes the power relations of actors commodity chains (GCCs) and global value (firms) along the commodity chain; andan chains (GVCs), originating in world-systems institutional dimension, the background of theory, and developed since the 1990s by Gary state regulation and other institutional rule Gereffi and his colleagues. setting against which firms in GCCs operate. Porter’s value chain analysis has been influential The GVC framework built on this conceptu- in both academic and policy circles, highlighting alization with a view to refining the forms of the various activities a firm performs and the governance found in interfirm value chains, resulting systems of inputs, transformations, and – echoing some insights from Porter’s value and outputs making up the production process. chain approach – paying more attention to the Influential in economic geography for the anal- local and regional dimension of clusters within ysis of industrial clustering, it has also informed GVCs. Based on a critical engagement with the GPN framework with regard to the centrality these conceptual antecedents, and following of value creation and the spatial organization of Henderson et al. (2002), a GPN can be defined production processes and service provision. To as the nexus of interconnected functions and better understand how economic activities are operations through which goods and services organized within and between firms, the role are produced, distributed, and consumed. Over of social networks and the embeddedness of the years, GPNs have become organizationally economic action in ongoing social relations – in and geographically more complex, increasingly contrast to the methodological individualism blurring traditional organizational boundaries. of transaction cost economics – have to be They integrate regional and national economies, integrated as crucial elements in GPN analysis. cutting through state boundaries in highly Economic sociology and an emerging literature differentiated ways to create discontinuously ter- on relational economic geography therefore had ritorial structures that are shaped by regulatory a major impact on the development of the GPN and nonregulatory barriers as well as variegated framework. This was complemented by insights sociocultural conditions of the places connected from ANT and its emphasis on a nonessentialist by GPNs. approach to studying networks and actors. ANT reinforces a relational view, avoiding artificial dualisms like structure/agency and global/local, Developing a heuristic device: GPN 1.0 and thus opening up analytical space for inves- tigating multiple actors and their heterogeneous The original GPN framework as developed in relations in GPNs. Henderson et al. (2002) – now often referred to Finally, GCCs and GVCs have provided a as GPN 1.0 – draws on three analytical registers: major impetus for the GPN framework. GCC value, power, and embeddedness. Two notions analysis addresses four different dimensions of value are important for GPN research. First, (Gereffi and Korzeniewicz 1994): an input–output value is to be understood as surplus value created

2 GLOBAL PRODUCTION NETWORKS in transnational production systems through the and facilitators of economic activity, but also labor process. This brings into focus issues of exercise buyer power as major consumers (public employment, working conditions, and produc- sector purchasing), and producer power (through tivity at various points in the network, with state-owned enterprises). Civil society actors far-reaching consequences for socioeconomic produce various forms of collective power, for development. Second, value refers to the notion instance through labor unions, nongovernmental of different forms of rents that firms can realize organizations (NGOs), and consumer initiatives, within GPNs. These include technological rents, which can also have considerable impact on achieved through access to advanced product GPNs by putting pressure on lead firms. and process technologies; brand rents, realized Finally, GPN analysis takes into account the through a strong market presence and consumer embeddedness of economic activity, along three preferences; organizational rents, achieved by dimensions (Hess 2004). Societal embedded- optimizing managerial and organizational skills ness – a notion that draws on the work of and production processes; and relational rents, Karl Polanyi – refers to the importance of an realized through strategic links with other firms actor’s institutional and cultural background in the wider GPN. Other forms of rent may in shaping their actions, rather than deploying also occur. For example, in sectors where global a universalistic notion of rational economic trade is highly regulated or restricted, preferential agency. Network embeddedness – from Mark access may generate “trade policy rents,” as in Granovetter’s work in economic sociology – puts the now defunct global trade regime in textiles an emphasis on the relevance of social ties that and garments known as the Multi Fibre Arrange- shape the relations between actors in GPNs. ment. In relation to economic development, Finally, territorial embeddedness takes into these two vectors of value creation are com- account the geographical dimension of GPNs plemented by processes of value enhancement and the varying degrees to which firms, nonfirm (increasing the value added at various stages of organizations, and institutions are “anchored” production) and, crucially, value capture, that in particular places. Together, embeddedness, is, the process of retaining economic benefits. power, and value constitute the three analytical The latter is of particular importance for both lenses of the GPN framework, guiding research firms in GPNs and the places and societies they into GPNs’ organizational, geographical, and connect. developmental dynamics. How and where value is created, enhanced, and captured depends on the power relations Towards theorizing global production between the multiple actors in GPNs. Firms exercise corporate power based on their posi- networks: GPN 2.0 tion within GPNs, their different capabilities, and the resources available to them. State and As a heuristic device, the GPN 1.0 concept civil society organizations exercise power that outlined above has inspired a wealth of research influences firms’ operations; rather than forming and empirical studies. However, as a quite holis- an external environment within which firms tic analytical framework it also has potential act, these nonfirm actors are conceptualized as limitations with regard to its explanatory power integral parts of GPNs. Thus state organizations and the identification of the causal mechanisms assume power through authority as regulators that create and transform GPNs. To address this

3 GLOBAL PRODUCTION NETWORKS issue, Neil Coe and Henry Yeung – two key deal to both enhancing the explanatory power contributors to GPN 1.0 – set out to recon- of the concept and highlighting major drivers ceptualize and theorize GPNs in a new – and and causal mechanisms of GPNs and resultant arguably more analytically focused – way to uneven geographies of economic development. develop a concept that since has become known Like all its antecedents, this approach has not as GPN 2.0 (Coe and Yeung2015). As a dynamic been without its own critics, in particular with theory, GPN 2.0 reframes GPNs and their eco- regard to the role of lead firms and the con- nomic development implications along four ceptualization of development (cf. McGrath major dimensions. The first of these explores 2017). The subsequent discussion therefore will the capitalist dynamics underpinning GPNs and draw on salient insights from all conceptual the firms organized within them. Here, four contributions made to date in the realm of GPN independent variables are identified that explain research. GPN formation and transformation: (i) the ways in which firms in GPNs attempt to optimize cost-capability ratios in order to remain compet- Governing GPNs itive; (ii) the dynamics of market development and the need to meet new conditions of demand From early GCC analysis through to the GVC as well as developing supplier capabilities; (iii) and GPN frameworks, a central concern has the imperative of financialization and the need been with the governance of interfirm relations for firms to operate under the disciplining influ- and the asymmetrical distribution of power ence of finance and shareholders; and (iv) the between firms. The initial taxonomy devel- continuous challenge of managing risk, be that oped in this context distinguishes between economic, political, social, or environmental buyer-driven and producer-driven commodity (Yeung and Coe 2015). chains. In industrial sectors where high capital These capitalist imperatives ultimately impact requirements are the main barrier of entry for on and determine GPN firms’ strategies with firms, as in the automotive and aircraft industries, regard to their organizational and spatial con- the value chain is driven by large manufactur- figurations and relations, the second dimension ers (producers). Buyer-driven value chains are of GPN 2.0 theory. These strategies include found in sectors that are labor-intensive and intrafirm coordination, interfirm partnership, where entry barriers are primarily the design, and extra-firm bargaining and conceptualize marketing, and branding capabilities of lead them as the dependent variables that explain firms. Examples include the garment and light how GPNs evolve, which in turn delimits the electronics industries (Gibbon, Bair, and Ponte third and fourth dimensions of GPN 2.0 the- 2008). While this taxonomy has proved useful orizing, helping to explain the various value to identify and analyze one important aspect capture trajectories pursued by GPN firms (and of the distribution of power within GPNs, the by extension the regions and locales where they increasing complexity of contemporary produc- operate), and the economic development out- tion systems does not always conform to this. comes associated with them (through processes Other forms of governance have subsequently of strategic coupling, cf. Yeung 2016). Overall been identified, such as technology-driven value then, GPN 2.0 represents a major milestone in chains characteristic of information and com- advancing GPN research, contributing a great munication industries (particularly software),

4 GLOBAL PRODUCTION NETWORKS where entry barriers lie with the control of framework therefore explicitly recognizes non- technological standards and related intellectual firm actors as integral parts of the production property rights. network. Consequently, state–capital–society While providing insight into some fundamen- relations in the places linked through GPNs tal power configurations within GPNs, these are fundamental in shaping economic and social types of chain-driving governance structures are outcomes (Smith 2015; Pickles and Smith 2016). quite crude, obscuring the multiplicity of power Thus an explicitly geographical perspective is relations between firms (and nonfirm actors) critical to understanding the ways in which within a GPN. To better capture the various GPNs are governed and different stakehold- power relations between firms, a typology of ers struggle over the creation and capture of value chain coordination has been developed value. that describes the nature of exchange between This requires GPN research to conceptualize firms as five possible forms of governance: power more explicitly, rather than only in terms market-based governance, where transactions are of the individual or collective actors exercising easily codified around simple products; modular it. Following the work of John Allen (2003) value chains, where codification of transactions on geographies of power, three different forms extends to complex products (e.g., between of power can be distinguished in investigating governance structures of/in GPNs (Hess 2008). automotive manufacturers and first-tier mod- The most commonly used view is a realist con- ule and component suppliers); relational value ceptualization of power as a capacity, something chains, where governance of complex products which individuals or organizations (firms, states) and exchange requires frequent communi- possess, enabling them to dominate others by cation; captive value chains, where suppliers virtue of social relationships. For firms, this are highly dependent on and monitored by potential to dominate derives from various their buyers; and hierarchical value chains, resources and firm capabilities, and enables them where exchange is internalized within the firm to control or direct the actions of others, as in (in-house production). the case of lead firms driving value chains. Gov- Even this taxonomy, however, does not ernments, at various scales, derive their power include an appreciation of power relations in from the authority and sovereignty accorded to GPNs extending beyond interfirm exchange, them as political institutions. or actors which are also crucial for the config- While conceiving of power as such a capacity uration, dynamics, and governance of GPNs: to influence others, whether or not it is exer- state and nongovernmental organizations, civil cised, is certainly important to understand the society, and consumers. Economic processes dynamics of GPNs, it is not sufficient. Actors of production, distribution, and consumption can also mobilize resources that are not all of are not simply driven by lead firms in GPNs their own making, through collective action and and coordinated between firms along the value cooperative network relationships. In such a rela- chain (Coe, Dicken, and Hess 2008). They tional, networked view, shared resources become are embedded in wider systems of sociospatial the medium through which power is exercised. relations and shaped by nonfirm actors operating This opens up possibilities for “powerless” actors with their own spatial logic and according to (firms lacking individual resources, workers, their own specific goals and priorities. The GPN consumers) to work together for mutual benefit

5 GLOBAL PRODUCTION NETWORKS and achieve their respective goals. Examples GPNs, fragmented production, for this range from the labor union movement and financialization to consumer and NGO campaigning, from firms’ strategic alliances to state-negotiated trade The second half of the twentieth century has agreements (cf. Smith 2015), none of which seen a growing tendency of transnational corpo- can be understood purely through power as a rations (TNCs) from the Global North shifting capacity. production activities to the Global South, Finally, and more recently, GVC and GPN especially in labor-intensive industries. This analysis have both developed a third lens of process has been described in the literature as power relations by drawing on Foucauldian a new international division of labor (NIDL), notions of power as knowledge and practice, taking advantage of a large and growing labor moving from a governance perspective to a force in developing economies, the transfer of governmentality approach. Of interest here is standardized production processes that require how power is mobilized and practiced, and only low-skilled workers, and the reduction of the specific techniques and discourses used and transport and communication costs based on “normalized” to direct the behavior of other new technologies. While still relevant today, as actors and achieve specific outcomes. These in the garment and consumer electronics indus- practices and techniques, including supply chain tries, the NIDL thesis does not fully capture management to orchestrate interfirm relations the drivers for the reorganization of GPNs that and corporate social responsibility codes of have emerged since the 1980s. Contemporary conduct, often become institutionalized in the capitalism is characterized by a global division of form of standards as an important element of labor that has experienced major geographical GPN governance. Some types of standards, for restructuring among world regions, the growing instance environmental or social, may be copro- interpenetration of global processes, regional duced through the collaboration of various firm dynamics, and local conditions, and massive and nonfirm actors; others, like some propri- transfers of people through migration, a work- etary technological standards such as Apple Inc.’s force that GPNs seek to attract. Another striking feature of these transformations is the increasing mobile phone operating system, are produced fragmentation and vertical disintegration of pro- in the context of the competitive struggle for duction, through outsourcing, subcontracting, market control and value capture through brand and offshoring. rents (Coe, Dicken, and Hess 2008). Outsourcing refers to a firm’s strategic decision The variety of governance forms and power to purchase goods or services from other compa- relations found in GPNs, within and across nies, rather than producing them in-house. The different territories, has become increasingly reasons for outsourcing usually lie in attempts to complex since the mid-1980s, as global pro- save cost and enhance profitability by focusing duction systems have continued to expand their on what a firm sees as its core competences and global footprint and become increasingly frag- where it has a competitive advantage. Interfirm mented in organizational terms. The following divisions of labor and outsourcing are by no section examines this “new wave” of global- means new, described in such classic texts as ization (Milberg and Winkler 2013) in more Alfred Marshall’s account of the Sheffield cutlery detail. industry in The Economics of Industry (Marshall

6 GLOBAL PRODUCTION NETWORKS and Paley Marshall 1881). Alfred Marshall’s work First, it denotes the increased significance of the highlighted the role of spatial proximity for the financial sector vis-à-vis other economic sectors. organization and profitability of interfirm divi- Financial markets have always been important sions of labor, and was drawn on in the emerging for the functioning of GPNs, but their powers literature on geographical clusters of economic have continually grown since the liberalization activity. He could not foresee, however, the and deregulation of the sector from the 1980s wave of outsourcing across national borders that onward. By the early twenty-first century, the became increasingly global in nature, referred value of global financial markets was estimated to as offshoring. This has become a central at about three times the global gross domestic empirical and conceptual feature of GPN and product, with approximately US$15 trillion value chain research. traded annually. Accelerated financial integra- The transnational relocation of manufactur- tion, with a growing propensity for financial ing and service activities – whether through decisions in one place to influence conditions in international outsourcing or offshoring in-house others, has substantial consequences for GPNs. activities – is pursued for a variety of reasons, The financial system incorporates all actors and including the pursuit of greater flexibility, the territories in GPNs (states, firms, individuals, avoidance of risks through location diversifica- cities, regions, and nations) via investments and tion, and, of course, reducing cost to maintain borrowing, but also through taxation and public or increase profitability. The combined effects of expenditure. This leads to the second aspect of outsourcing and offshoring are manifest not only financialization, the formation of global financial in the complex geographies of contemporary networks. Such financial networks, global in GPNs, but also in substantial changes in inter- nature but centered on a small number of global national trade. The “slicing up” of value chains cities such as New York and London, intersect has led to a growing trade in intermediary goods with GPNs in various ways and are crucial for and components, along with finished goods. their working. Networked financial institutions Therefore, for firms in GPNs, supply chain over the past decades have designed, produced, management has become an important element and sold increasingly sophisticated financial of competitiveness and a crucial strategic asset. products, with implications for the third form: At the same time, the offshoring of service tasks corporate financialization. (for instance, call centers, back-office functions) Firms in GPNs have shifted their focus of has further increased what is called “trade in profitability away from traditional sources such tasks.” These developments provide economic as production and toward profits gained through opportunities for some firms in developing and financial activities. Corporate financialization emerging economies, but other players, failing is linked to the fragmentation of production to realize the potential of new global divisions of in GPNs in two major ways. Within the man- labor, have lost their competitiveness. ufacturing and retail sectors, more and more Financialization has become much more corporations have started to offer financial ser- important for GPNs since the mid-1990s (Coe, vices as these produce higher profits than the core Lai, and Wójcik 2014; Coe and Yeung 2015; business in many cases. These higher profits have Milberg and Winkler 2013). In the context of not been redistributed to owners and sharehold- GPN research, financialization can be analyti- ers, nor have they been reinvested in production cally broken down into three interrelated forms. or service provision, but rather they have been

7 GLOBAL PRODUCTION NETWORKS invested in financial assets promising higher rates Since the formation of the labor movement of return. In addition, and under pressure from in Europe during the Industrial Revolution shareholders and investors to maximize returns, and the subsequent legalization of trade unions, noncore functions and production have been collective labor agency in the form of labor offshored to low-cost locations. Again, this has unions has played an important role in ensuring had substantial ramifications, not only for the labor rights and improving working conditions. geographies of production in GPNs but also for Through collective bargaining, workers exercise labor market structures and workers, as Milberg power vis-à-vis capital to negotiate a fair share of and Winkler (2013) convincingly show for the the value created and generally improve their lot. United States. As production in GPNs has extended in scale and scope, however, the global fragmentation of value chains has posed additional problems Laboring in GPNs for organized labor, as it tries to match the capability of capital to organize across national While emphasizing how transnational produc- and international space. Unlike capital, labor tion systems are orchestrated by a variety of firm is socially and, to a large extent, territorially and nonfirm actors, arguably the role of labor embedded, and therefore in danger of being and the agency of workers in shaping GPN played off against labor in different locations. Yet have been undertheorized. This is problematic, trade unions have developed strategies to upscale not least because the process of value creation their activities, establishing their own global and enhancement under capitalism is not only networks. Two forms can be distinguished: labor a question of generating different forms of networks centered on a specific TNC, where economic rent from the production process or bargaining takes place, for instance, through of generating profit in financial markets, but is international framework agreements between also reliant on the labor process by which labor unions and a single employer; and Global Union power is transformed into surplus value. Labor Federation-centered networks, which usually therefore needs to be considered explicitly in cover a specific industrial sector and negotiate GPN research. Such an analysis should recognize with various firms in GPNs. the outcomes for workers, for example in terms While collective agency through trade union- of wages, working conditions, and labor rights, ism clearly has empowering effects for labor but also the potential for workers to transform in GPNs, this has been gradually eroded in and shape GPNs based on their individual and this era of neoliberal globalization. Labor mar- collective power and agency. Much of the lit- kets around the world have been increasingly erature addressing labor has focused on public deregulated, leading to growing numbers of and private sector governance of labor relations “flexible,” casualized, and often precarious jobs and on developing labor standards, but it often in manufacturing as well as services. In the wake conceptualizes workers as rather passive and at of this, new labor market intermediaries such as the receiving end of capital and state power. In temporary staffing industries have emerged to order to eliminate this blind spot, GPN literature play an important part in many countries, fueling has started to engage with the work of labor GPNs with domestic and migrant labor. Under geography and the industrial relations literature these circumstances, traditional collective action (Coe and Hess 2013). by organized labor has a declining potential to

8 GLOBAL PRODUCTION NETWORKS galvanize workers’ power. Yet individuals and rights, including freedom of association and the groups still have agency in shaping GPNs and right to collective bargaining. The concept of the conditions of work within them. Following social upgrading is usually deployed together Cindy Katz (2004), worker agency can take the with the notion of economic upgrading, which form of strategies of resilience, where people describes improvements in technology, skills, develop everyday coping mechanisms. It can and productivity that generate enhanced profits result in reworking strategies, where individuals derived from participation in GPNs. It is often or communities work to actively improve the assumed that economic upgrading is positively material conditions of their existence, and it can associated with social upgrading, but empirical lead to strategies of resistance, through which the studies have shown that this is not necessarily status quo of capitalist social relations is directly the case. How the economic and social dimen- challenged. Thus labor is most certainly not a sions of labor in GPNs play out in specific passive element in the formation of GPNs. places to generate positive outcomes for workers Yet working conditions and enabling rights in depends on how labor agency is shaped by the GPNs continue to be areas of serious concern. governance structures of particular GPNs (the The collapse in 2013 of the Rana Plaza building vertical dimension) and by the local social and in Dhaka, Bangladesh, in which more than economic conditions of employment and work 1100 garment workers died, was a horrendous (the horizontal dimension). This returns us to incident that threw into sharp relief the dark wider questions of socioeconomic development side of fragmented production in GPNs in at the global–local nexus. the pursuit of profits, and reopened academic and public debates about the responsibilities of governments, firms, and consumers in GPNs to GPNs and regional development safeguard workers’ lives and livelihoods, espe- cially in labor-intensive industries in the Global To understand regional development in an era South. of global, networked capitalism, it is clearly not One way in which recent GPN research has enough to focus on local, endogenous factors taken up the challenge of conceptualizing labor, alone. At the same time, economic globalization as socially embedded agents and human beings cannot be adequately explained without paying rather than simply factors of production, is the attention to the specific assets and socioeco- notion of social upgrading in GPNs (Barrientos, nomic conditions in different countries, regions, Gereffi, and Rossi 2011). Social upgrading can and localities. In a relational view, both the be defined as the process of improving the rights growth factors within a given region and the and entitlements of workers as human beings strategic priorities of transregional and transna- and social actors, enhancing the quality of their tional firms that orchestrate GPNs need tobe employment, and improving the living standards taken into consideration in order to investigate of workers, their families, and communities. In and explain development outcomes. In the GPN most of the literature, this is broken down into literature, this has been labeled the globalization two components: (i) measurable labor standards, of regional development, a process whose out- including wage levels, working hours, social comes are far from certain, depending on the protection entitlements, and type of employ- strategic coupling of regional assets with GPNs ment – regular or irregular; and (ii) enabling (Coe et al. 2004). Regional assets include the

9 GLOBAL PRODUCTION NETWORKS size and composition of the workforce (human are also an arena for organized intervention by capital), education and research facilities, and private and public actors with different implicit natural resource endowments, among others. and explicit goals (Hess 2009). As firms in GPNs Three aspects are characteristic for the strategic develop their networks of capital accumula- coupling process between regions and GPNs: tion, they are always operating in the context first, it is time and space contingent, subject to of (potential) societal and social resistance and change but also path dependent; second, it is protective social movements, a process that has multiscalar and transcends territorial boundaries; been described by Karl Polanyi (1944) in his third, it is strategic because the coupling process institutionalist view of development as the “dou- comes about through the intentional and active ble movement.” This process plays out through intervention of multiple actors (Yeung 2009). organizational networks and coalitions across Mediating the strategic coupling process is a different scales, and GPN research grounded in range of institutions operating within and beyond relational concepts of space needs to be con- the region, in particular government, labor, and scious of this if it is to produce nonreductionist business agencies, with the aim of generating understandings of globalization and regional beneficial outcomes in terms of value gener- development, in both their material and their ation, enhancement, and capture, and hence discursive dimensions. economic development through the integration Arguably, GPN analysis has much to offer in of regions into wider GPNs. Positive outcomes terms of research into regional development and from globalizing regional development through the experiences of different places enmeshed strategic coupling are not guaranteed, however; to various degrees in global networks, but of insertion into GPNs may be detrimental in course it cannot claim to be fully adequate to specific circumstances, depending on the power capture all dimensions of development, let alone configurations and asymmetries in the relevant be the only heuristic device or theoretical tool networks. Coe and Hess (2011) term this the to guide empirical research. In a sympathetic “dark side” of development, which can manifest critique, Kelly (2013) argues that some crucial itself in the form of ruptures within regions (e.g., elements for fully understanding development political exclusion, displacement or eviction of in place are obscured by exclusively utilizing people) and between regions and GPNs (e.g., the GPN concept. For example, he highlights disinvestment, exit of foreign firms). It can also the importance of environmental and land- result in friction when such connections cause scape changes that usually escape the gaze of social and economic tension and conflict within GPN research unless they are immediately rel- and beyond the region, such as social and class evant for the transnational and regional firms conflict, struggles over uneven value capture, being studied. A similar “blind spot” in Kelly’s labor exploitation, or growing gender inequality. view is the realm of households and families. In such cases, institutions will often aim for He attributes these shortcomings to a tension strategic de- or recoupling (Horner 2014) to between the network ontology underlying a improve regional developmental outcomes. relational GPN framework and a place-based GPNs are part of development as the geo- ontology found in other work on (regional) graphically uneven and historically contingent development that assumes localities and regions expansion and extension of capitalist systems as “complete” – albeit not bounded – entities of production, exchange, and regulation. They and spaces of lived experience. A dialogue and

10 GLOBAL PRODUCTION NETWORKS exchange between the GPN concept and cog- SEE ALSO: Corporate financialization; nate approaches, recognizing the possibilities and Corporations and the nation-state; limitations of one another, needs to continue as Development; Fragmentation of production; part of a critical cultural of Global commodity/value chains; Globalization; GPNs and regional development. Governance and development; Labor geographies and the corporation; Relational assets; Spatial organization and structure GPNs – a politically contested field

To conclude, the GPN framework as developed References since the turn of the century provides a heuristic device and theoretical approach with which Allen, John. 2003. Lost Geographies of Power. Oxford: to analyze the complex realities of economic Blackwell. globalization and economic development. On Bair, Jennifer. 2005. “Global Capitalism and Com- the ground, of course, GPNs are not only net- modity Chains: Looking Back, Going Forward.” worked forms of organization and value creation Competition & Change, 9(2): 153–180. in increasingly global markets, but also political Barrientos, Stephanie, Gary Gereffi, and Arianna in character – making them highly contested Rossi. 2011. “Economic and Social Upgrading in fields (Levy 2008). They connect multiple sites Global Production Networks: A New Paradigm for of struggle for the creation, enhancement, and a Changing World.” International Labour Review, capture of value, shot through with power rela- 150(3–4): 319–340. DOI:10.1111/j.1564-913X. 2011.00119.x. tions that ultimately determine the implications Coe, Neil M., Peter Dicken, and Martin Hess. of GPNs for territorial development. One of the 2008. “Global Production Networks: Realizing antecedents to the GPN framework, global value the Potential.” Journal of Economic Geography, 8(3): chains, has recently gained much prominence 271–296. DOI:10.1093/jeg/lbn002. in international policy circles, from the Inter- Coe, Neil M., and Martin Hess. 2011. “Local national Monetary Fund and the World Bank and Regional Development: A Global Production to the World Trade Organization and the Inter- Networks Approach.” In Handbook of Local and national Labour Organization. Indeed, some Regional Development, edited by Andy Pike, Andrés are concerned that GVC analysis is running the Rodríguez-Pose, and John Tomaney, 128–138. danger of becoming another neoliberal tool, London: Routledge. despite its rootedness in critical , as Coe, Neil M., and Martin Hess. 2013. “Global Pro- its central ideas are “translated” into the inter- duction Networks, Labour and Development.” national development policy realm that critics Geoforum, 44(1): 4–9. DOI:10.1016/j.geoforum. 2012.08.003. argue still follows orthodox economic develop- Coe, Neil M., Martin Hess, Henry Wai-chungYeung, ment ideas and practices (e.g., Fernández 2014; et al. 2004. “Globalizing Regional Development: A Neilson 2014). Thus it is imperative for GPN Global Production Networks Perspective.” Trans- analysis and cognate approaches to maintain actions of the Institute of British Geographers, 29(4): their critical focus, investigating GPNs as at once 468–484. DOI:10.1111/j.0020-2754.2004.00142. economic and institutionalized, highly political, x. and discursive structures with far-reaching and Coe, Neil M., Karen P.Y. Lai, and Dariusz Wójcik. often contradictory developmental outcomes. 2014. “Integrating Finance into Global Production

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Networks.” Regional Studies, 48(5): 761–777. Kelly, Philip F. 2013. “Production Networks, Place DOI:10.1080/00343404.2014.886772. and Development: Thinking through Global Coe, Neil M., and Henry Wai-chung Yeung. 2015. Production Networks in Cavite, Philippines.” Geo- Global Production Networks: Theorizing Economic forum, 44: 82–92. DOI:10.1016/j.geoforum.2011. Development in an Interconnected World. Oxford: 10.003. Oxford University Press. Levy, David L. 2008. “Political Contestation in Fernández, Victor Ramiro. 2014. “Global Value Global Production Networks.” Academy of Manage- Chains in Global Political Networks: Tool for ment Review, 33(4): 943–963. Development or Neoliberal Device?” Review of Marshall, Alfred, and Mary Paley Marshall. 1881. The Radical Political Economics, 47(2): 209–230. Economics of Industry. London: Macmillan. Gereffi, Gary, and Miguel Korzeniewicz, eds. 1994. McGrath, Siobhan. 2017. “Dis/articulations and the Commodity Chains and Global Capitalism. Westport, Interrogation of Development in GPN Research.” CT: Praeger. Progress in Human Geography, online. DOI:10. Gibbon, Peter, Jennifer Bair, and Stefano Ponte. 1177/0309132517700981. 2008. “Governing Global Value Chains: An Intro- Milberg, William, and Deborah Winkler. 2013. Out- duction.” Economy and Society, 37(3): 315–338. sourcing Economics: Global Value Chains in Capital- DOI:10.1080/03085140802172656. ist Development. Cambridge: Cambridge University Henderson, Jeffrey, Peter Dicken, Martin Hess, et al. Press. 2002. “Global Production Networks and the Anal- Neilson, Jeffrey. 2014. “Value Chains, Neoliberal- ysis of Economic Development.” Review of Inter- ism and Development Practice: The Indonesian national Political Economy, 9(3): 436–464. DOI:10. Experience.” Review of International Political Econ- 1080/09692290210150842. omy, 21(1): 38–69. DOI:10.1080/09692290.2013. Hess, Martin. 2004. “‘Spatial’ Relationships? Towards 809782. a Reconceptualization of Embeddedness.” Progress Pickles, John, and Adrian Smith. 2016. Articulations in Human Geography, 28(2): 165–186. of Capital: Global Production Networks and Regional Hess, Martin. 2008. “Governance, Value Chains and Transformations. Oxford: Wiley-Blackwell. Networks: An Afterword.” Economy and Society, 37: Polanyi, Karl. 1944. The Great Transformation: The 452–459. Political and Economic Origins of Our Time. Boston: Hess, Martin. 2009. “Investigating the Archipelago Beacon Press. Economy: Chains, Networks and the Study Smith, Adrian. 2015. “The State, Institutional Frame- of Uneven Development.” Journal für Entwick- works and the Dynamics of Capital in Global Pro- lungspolitik, 25(2): 20–37. duction Networks.” Progress in Human Geography, Hess, Martin, and Henry Wai-chung Yeung. 2006. 39(3): 290–315. “Whither Global Production Networks in Eco- Yeung, Henry Wai-chung. 2009. “Regional Devel- nomic Geography? Past, Present and Future.” Envi- opment and the Competitive Dynamics of Global ronment and Planning A, 38: 1193–1204. DOI:10. Production Networks: An East Asian Perspective.” 1068/a38463. Regional Studies, 43(3): 325–351. DOI:10.1080/ Horner, Rory. 2014. “Strategic Decoupling, Recou- 00343400902777059. pling and Global Production Networks: India’s Yeung, Henry Wai-chung. 2016. Strategic Coupling: Pharmaceutical Industry.” Journal of Economic East Asian Industrial Transformation in the New Global Geography, 14(6): 1117–1140. DOI:10.1093/jeg/ Economy. Ithaca, NY: Cornell University Press. lbt022. Yeung, Henry Wai-chung, and Neil M. Coe. 2015. Katz, Cindy. 2004. Growing Up Global: Economic “Toward a Dynamic Theory of Global Produc- Restructuring and Children’s Everyday Lives.Min- tion Networks.” Economic Geography, 91(1): 29–58. neapolis: University of Minnesota Press. DOI:10.1111/ecge.12063.

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Further reading Framework for Analysing the Global Economy.” Global Networks, 1(2): 89–112. DOI:10.1111/ 1471-0374.00007. Arnold, Dennis, and Martin Hess. 2017. “Gov- Gereffi, Gary, John Humphrey, and Timothy Stur- ernmentalizing Gramsci: Topologies of Power geon. 2005. “The Governance of Global Value and Passive Revolution in Cambodia’s Gar- Chains.” Review of International Political Economy, ment Production Network.” Environment and 12(1): 78–104. Planning A, 49(10): 2183-2202. DOI:10.1177/ Neilson, Jeffrey, and Bill Pritchard. 2009. Value Chain 0308518X17725074. Struggles: Institutions and Governance in the Plantation Coe, Neil M. 2009. “Global Production Networks.” Districts of South India. Oxford: Wiley-Blackwell. In International Encyclopedia of Human Geography, Yeung, Henry Wai-chung. 2005. “Rethinking Rela- edited by Rob Kitchin and Nigel Thrift, 556–562. tional Economic Geography.” Transactions of the Amsterdam: Elsevier. Institute of British Geographers, 30(1): 37–51. Dicken, Peter, Philip F. Kelly, Kristopher Olds, and DOI:10.1111/j.1475-5661.2005.00150.x. Henry Wai-chung Yeung. 2001. “Chains and Net- works, Territories and Scales: Towards a Relational

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