Note: This Research Bulletin is a source paper for RB 236 and will not be published in its present form.
Over the past twenty years or so, a number of research literatures have emerged which have attempted to specify and explain the novel ways in which contemporary globalization has affected how the world-economy operates. These literatures have, however, differed markedly in terms of their disciplinary orientation, their scales of analysis, the processes which they depict as driving or even defining globalization, and their interpretations of the impacts of the processes that they describe. Whilst each of these literatures have offered some important insights into the nature of globalization, we share the growing sense of frustration recently expressed by others (Cooper, 2001; Yeung, 2002; Kumar, 2003; Rosamond, 2003) as to the limitations of each of these literatures in adequately grasping the breadth of what is happening to the world-economy. The rationale for this paper, therefore, echoes the call made a few years ago by Peter Dicken and his colleagues (Dicken et al., 2001) for the development of new approaches which might break through the ‘miasma of conflicting viewpoints and alternative discourses’ of globalization in ways that might more effectively (a) tackle the multiplicity of scales at which globalization operates, (b) abandon the tendency towards the prioritization of particular organizational and institutional forms within analyses of globalizing processes and (c) balance the need for analyses of the global economy as a structural whole with recognition of the limitations of generalizing extrapolations from individual cases (Dicken et al., 2001: 89). In their paper Dicken et al. (2001) argue that these challenges can best be met through the development of a research methodology which highlights the role of networks (existing at a multitude of organizational and geographical scales) in the production of the global economy. This has given rise in their work to the identification of global production networks as a key means of understanding the functioning of the global economy1.
We share this focus upon the identification and exploration of networks as the key to rejuvenating our understanding of globalization. Nevertheless, whilst Dicken and his colleagues attempt to pursue that agenda through the analysis of specific industrial sectors via explorations of individual global production networks, our intention here is to retain more of a focus upon how those networks relate to broader structures within the global economy and the geographies which they constitute. Like Dicken et al. (2001) we use Gary Gereffi’s idea of ‘commodity chains’ as a starting point for our analysis (see, for instance, Gereffi and Korzeniewicz, 1994), but rather than attempting to connect Gereffi’s analysis to a conceptually distinct (if not disjunctive) actor-network approach, here we explore the relationship between global commodity chains (GCC) and world city networks (WCN). The advantage of this is that it brings together two literatures which already share many of the same conceptual and discursive starting points rather than competing ones thereby avoiding the dangers of conceptual eclecticism often involved in attempts to bring together disparate discourses on the same topic2.
One of the key properties our selected literatures have in common is that they both depict fundamental spatial models of flows (Figure 1): a chain of production nodes connected by commodity flows and a network of city nodes connected by information flows. Both are also untypical social science: they both focus upon trans-state processes. This is due, in part, from their sharing a common provenance in world-systems analysis wherein contemporary states are viewed in their wider systemic context. As such, they both represent attempts to break free of the pervasive statism that has been embedded into the social sciences since their very beginnings (Taylor, 1996; Wallerstein, 1991) and continues to limit our understanding of global change.Thus whilst there has been, particularly since the early 1990s, an explosion of writings about globalization which have heralded the decline of the state as the economic unit of analysis, in reality most ‘globalization debates’ have remained largely about states to the neglect of other institutions/foci (Taylor, 1999, for a notable exception see Arrighi, 1994).
Figure 1: Commodity chains and the world city network as separate spatial frameworks.
To help understand why this has been the case, it is useful to consider the variety of ways in which we conceptualize the global economy. Global geographies come in two basic forms: an idealist view of spatial organization, sometimes termed metageography, and a materialist spatial structure of practice, known as spatiality. Metageographies are the unexamined spatial frameworks that we carry around in our heads to make geographical sense of our world (Lewis and Wigen, 1997). They are the collective spatial premises underlying our interpretations of past and present social relations ( Taylor, 2004a). Spatialities are the spatial structures created through the everyday practices of production, distribution and consumption that materially constitute our world ( Taylor, 2004b). They are the spatial ordering of social relations that are being continually reproduced in the routine operations of material life, past and present. Metageographies and spatialities are closely related; formations of the former are grounded in the realities of the latter. But, since they encompass quite different processes of creation, inevitably they go through processes of convergence and divergence. If globalization marks a metageographical transition, a social alteration in collective geographical imagination, then we are only at the initial disintegration phase of the process from old to new views of spatial organization. The impact of Castells’ (1996) work on the ‘network society’ suggests that the evolution of a new metageography may be taking shape, at least in academia. However, in this paper we focus on the social and economic reality behind the need for a new metageography, the new material spatiality that metageographical concepts such as globalization are attempting to capture.
Bringing two literatures together is very large task whatever their degree of synergy. Thus the paper is about experimenting with different ideas in the hope that the resulting whole is more than the sum of parts. This is an initial reporting on this work. Our argument is divided into two substantive parts. First, we outline the progress made thus far in mapping trans-state processes and providing analytic models for building twenty first century global geographies through our two chosen literatures. This is where we present basic outlines of global commodity chain analysis and world city network analysis, explore how they relate to other models of the global economy and consider some of their limitations and weaknesses. Second, we bring the two models together by asking what each has to offer the other before initiating the task of synthesis. Finally, the possible advantages of such a synthesis are illustrated through a discussion of regional and sectoral examples: global city formation in Latin America and the global coffee commodity chain.
II. Models for constructing twenty first century global geographies
As we have argued in the preceding section, in order to properly grasp the ways in which globalization is affecting the global economy there is an urgent need to transcend the traditional state-centrism of the social sciences as well as their disciplinary insularities. As part of this task it is important to explore existing trans-disciplinary approaches to social knowledge. This leads us to consider one of the most prominent trans-disciplinary clusters of social scholarship - world-systems analysis (Wallerstein, 2004). World-systems analysis is a school of thought that includes three vital characteristics salient to our project. First, it is explicitly transnational in conception; individual states are understood within the global economy as a systematic whole. Second, it is explicitly trans-disciplinary in its treatment of social knowledge; it is based upon a materialist argument that explicates social change in its numerous manifestations. Third, it encompasses the critical spatiality of the capitalist world-economy as core-periphery structuring of world space; it focuses attention on the spatial dynamics of uneven development. Both of the models we deal with in this paper derive from this fecund source of ideas. Global commodity chain analysis originates from concern to show how value is transferred from periphery to core thus sustaining or deepening uneven development. World city network arguments derive from concern about how global capitalism is concretely commanded and enabled in contemporary globalization. In the remainder of this section, we present basic outlines of both approaches, briefly explore their relation to world-systems analysis, and discuss their major limitations.
II.1. Global Commodity Chains
In mainstream economics the usual way of analysing large-scale commodity flows has been through international trade theories. In general, these theories assert that, in an international economy, economic development emerges from whatever absolute, comparative or competitive advantages a country may have. Without recourse to a refined analysis3, it can be noted that the basic assumptions underpinning these classical trade theories are fatally flawed by their state-centric spatiality. The underlying supposition that national states are the spatial actors controlling the global economy is indefensible, while the spatiality of trade is of course far more complex than only ‘one step’-trade between producers in one country and consumers in another (Díaz, 2003: 47-63). For instance, both intra-firm and intra-industry trade constitute an important – and increasing – share of world trade. By the end of the 1990s, an estimated one-third of world trade consisted of intra-firm trade, whilst another third was accomplished within production networks controlled by TNCs. Although reliable time series are sparse, available information points to the growing importance of such intra-firm trade. The significance of intra-industry trade has increased significantly since the 1980s too. In many OECD countries, the intra-industry share of manufacturing trade has risen to two-thirds or more (UNCTAD, 1995, 2002; United States, Department of Commerce, 2000, 2004; OECD 2002)4.
Furthermore, in the contemporary global economy, production and trade patterns are mostly guided by the strategic behaviour of firms, while (fixed) factor endowments of countries have become less important in explaining commodity flows. Both industrial organization trends of outsourcing based on new technologies and economic policies of liberalization have made national states clearly insufficient as units of analysis. The overarching analytical disjuncture is that, in spite of the empirical evidence for the importance of trans-state economic flows mentioned above (or that presented in Dicken, 2003), classical theories of economic development have generally been organized around an inter-national rather than trans-national framework. As a consequence, research on production and trade has been territorialized to the detriment of properly understanding the worldwide flows that constitute contemporary globalization. It was only when production and trade became interpreted, via the world-systems writings of Hopkins and Wallerstein in the 1980s, as a series of cross-border firm-based transactions, that a literature emerged that released itself from the burden of the state-centric metageography.
Building upon the writings of Braudel (e.g. 1984), Wallerstein and his colleagues introduced the concept of ‘global commodity chains’ as ‘a network of labour and production processes whose end result is a finished commodity’ (Hopkins and Wallerstein, 1986: 159). However, it was only with the advent of the work by Gereffi and Korzeniewicz (1994) that we can speak of a relatively coherent paradigm5. The global commodity chain approach henceforth focused on value creation, its distribution and control within transnational networks, which extend in a chain of nodes from raw material exploitation, primary processing, through different stages of trade, services and manufacturing processes to final consumption and waste disposal. Taken as a whole, a global commodity chain may link up different organizational models of production, trade and service providing processes, and can even include the generation of externalities and inter-market spill-overs (Gereffi and Kaplinsky, 2001; Pelupessy, 2001). The global commodity chain approach is basically an analytical political economy tool, where attention is focused upon the systems of value creation employed by firms and other agents. The linkages between these units are conceived of as a chain linking sequences of imperfect markets, reflecting the market power asymmetries that lead to unequal value distributions. The dynamics of any specific chain are determined by the input-output structure of the nodes or chain segments, their geographical location, institutional and socio-political framework and their governance or control structure. The latter gives the commodity chain its hierarchical and unequal character, since ‘[a] chain without governance would just be a string of market relations’ (Humphrey and Schmitz, 2001: 20).
There are three main ways in which the global commodity chain approach provides an effective analytical tool for understanding the governance structure of specific chains and their significance. First, there is the capacity of participants in the chain to appropriate rents and the barriers to entry of the different nodes. These have a dynamic character, and may be eroded by potential competition (Kaplinsky and Morris, 2001). Second, there is the behaviour of lead firms involved in the governance structure. This may refer to direct co-ordination of activities on a global scale, the identification and appropriation of dynamic rents, the assignment of specific roles to chain agents, as well as indirect rule setting for the chain. Third, there are the different types of chains defined by the upstream or downstream location of lead firms(s), the kind of dominant or core production factor which they control and others.
Rather than conceptualizing the global economy through a series of economic containers, the global commodity chain approach allows us to steer away from classical state-centric frameworks by focusing on system-wide networks of labour and production processes. As a consequence, this approach is better geared to reveal the spatial ordering of social relations that are being continually reproduced in the routine operations of material life, through everyday practices of production, distribution and consumption in a globalized economy. Nevertheless, because the focus of the approach is upon the networks involved in the production of particular commodities, commodity chain research has been less successful in specifying how chains contribute towards the complex dynamics of the broader economic system that they are located within (Bair, 2003). Moreover, global commodity chain research also lacks a comprehensive treatment of the spatiality of commodity chains (Leslie and Reimer, 1999). Despite the theoretical insight that a global commodity chain connects inputs from different parts of the world, pulls them together in specific sites and provides output to different locations, the study of the actual geographies of these commodity chains has remained relatively underdeveloped. Although a number of writings have focused on the role of global commodity chains in regional development and the potentials of localities (e.g. Schmitz, 2000, and some contributions in the volume edited by Hughes and Reimer, 2004), an overarching spatial conceptualization remains an unfulfilled task. That is, there is a critical need to trace commodity chains spatially, as place-bound linkages between different localities (e.g. rural villages and cities).
Some would go further in this critique. Coe et al. (2004) and Smith et al. (2002), for example, argue that, despite the global focus of the commodity chain approach, it still remains preoccupied with the nation state as geographical scale of analysis. They back this up through reference to Gereffi’s 1999 paper on the prospects for ‘industrial upgrading’ which he defines as “improving the position of firms or nations in international trade networks” (1999: 39). The result, Coe et al. (2004) and Smith et al. (2002) argue, is that global commodity chain analysis “has surprisingly little to say about regional and subnational processes, because of the focus on the international dimensions of commodity chains and global divisions of labour” (Smith et al., 2002: 49)6.
Another more specific limitation in global commodity chain research is that the empirical scope of analysis has been somewhat limited, with the majority of studies focusing on a small number of primary commodities and industrial sectors. Services, in particular, despite an early call for exploring the “service sector nexus” (Rabach and Kim, 1994), have not been analyzed particularly effectively in commodity chain research, either in industries where the service constitutes a commodity in its own right or where it is used to facilitate the production of other more tangible commodities. It is, perhaps above all, the lack of attention that has been paid to understanding the crucial role of producer services in setting up and sustaining global networks of production that has been the most crucial omission (Daniels and Bryson, 2002). This may perhaps reflect a tendency, noted by Gibbon (2000) to concentrate analysis upon just one of the four dimensions of global commodity chains originally identified by Gereffi and Korzeniewicz (1994: 97) – their internal governance structures – to the detriment of the other three: (1) their input-output structure (i.e. which value chain research has tended to concentrate upon); (2) the locations which they encompass (i.e. their spatial dynamics as discussed above); and (3) the broader institutional context that identifies how the actions of states and other political/economic actors can affect stage of the chain7.
II.2. The World City Network
In modern social science the traditional way of researching inter-city relations has been through analyses of ‘national urban systems’. Typically using non-relational data from national censuses, varying populations of cities were used to define the ‘urban system’ as a ‘national urban hierarchy’. Models such as ‘the law of the primate city’ and ‘rank size rule’ were used to describe this ‘hierarchy’ as if the rest of the world did not exist8. The study of cities was nationalized, so that city relations were territorialized, to the severe detriment of properly understanding major cities like London and New York. It was only when such cities became interpreted, through a series of influential writings, first as international financial centers (Cohen, 1981), then as world cities (Friedmann and Wolff, 1982; Friedmann, 1986), and further as global cities (Sassen, 1991), that a ‘world city literature’ arose in which the study of cities, or some at least, broke free of national containers (for an interesting discussion of the emergence of this literature and how its relates to the broader trajectory of world-systems scholarship, see Slater, 2004). Today, we have moved from conceptualizations of world city formation to conceptualizations of world city network formation (Taylor et al., 2002): cities are studied system-wide in the modern world-system as a world city network.
The world city network has been specified as an interlocking network in which relations between cities are constituted by intra-firm flows in the advanced producer service sector of the world-economy ( Taylor, 2001). One of the features of the contemporary world-economy is that ‘services’ are becoming more and more important whether measured by employment or sales. Sassen (1991) pointed out that a key part of these services, the advanced producer services (such as inter-jurisdictional law and global advertising) used by multinational corporations, were becoming more and more concentrated in leading cities. There were good ‘cluster’ reasons for such concentration, as the firms operating in these services required information-rich environs to keep ahead in their business. But this first need did not lead to their concentration in just one or two ‘mega service centers’, rather a second need led to these services being offered across the world in cities covering all major regions. This second need of producer service firms was the requirement to provide their service where and when their clients needed it; and since the corporations they serviced were becoming global, service firms had no choice but follow suit and go global themselves. The alternative option of farming out their work to partner firms in other cities was never seen as feasible because of the importance of maintaining brand integrity in a field that deals in information and knowledge. Thus major service firms created worldwide office networks across the major cities of the world.
A key purpose of worldwide office networks is to enable transnational business to be conducted. Projects involving several jurisdictions, languages, cultures, and budgets will draw upon knowledge resources from a range of relevant offices. These intra-firm connections, both electronic and human, flow across the world silently linking the tower blocks that dominate so many cityscapes in all regions of the world. It is the aggregation of all the intra-firm flows – of information, knowledge, instruction, strategy, plans, personnel, etc. – that constitute the contemporary world city network. It is in this sense that advanced producer firms are the ‘interlockers’ of world cities. Hence when the network is modeled, it consists of three layers: the network level at the world-economy scale, the nodal level which is composed of the cities where the work of network formation takes places, and the sub-nodal level which is defined by the firms who are the agents of the whole process.
The world city network, then, is conceived here as an inter-connected web of nodes where multifarious information and knowledge is available to seize economic opportunities through innovations in production, distribution and consumption. The bottom line in this conceptualization is that world cities should not so much be conceived in their roles as trading sites, ports, banking centres or industrial towns, but rather as integral parts of complex networks of capital circulation and accumulation.
There are two main limitations of the world city literature, one is commonly voiced whilst the other is becoming increasingly important. The first is the concentration on a relatively few large metropolitan centers to concomitant neglect of all other cities. The most trenchant critique along these lines is by Robinson (2002: 536; see also McCann, 2002; Rae, 2006), who rightfully complains that ‘millions of people and hundreds of cities are dropped off the map of much research in urban studies’. This exclusion is from two ‘maps’: (i) the geographical map of world cities wherein most cities in the ‘South’ are missing; and (ii) the conceptual map of world cities which focuses on a narrow range of global economic processes so that myriad other connections between cities are missing. However, all cities experience contemporary global processes, and globalization can therefore not be construed as affecting just a few privileged cities. To summarize, Robinson criticizes the literature because of its use of a few major cities in the global north to set a world city-ness standard that is then applied to cities in the global south which have consequently been found wanting9: there may be some ‘global cities’ but there are certainly not any ‘unglobal cities’. Eschewing the irony of this criticism given the world-systems origins of this approach, she thereupon calls for a post-colonial approach to create a ‘more cosmopolitan urban theory’. Subsequently Robinson (2005: 760) has conceded that the world city literature now covers ‘a much wider range of cities around the globe’ thus lessening the exclusion from the map. This attempt to broaden our understanding of the world city network has seen the postulation of such ideas as ‘globalizing cities’ (Marcuse and van Kempen, 2000) or ‘cities in globalization’ (Taylor et al., 2006).
The second main limitation of the world city literature relates to its rather underdeveloped urban- theoretical underpinnings (see, however, Brenner, 2004). It can be noted that the dominant arguments in this literature developed from efforts to try and make sense of contemporary economic processes: the two seminal contributions are by Friedmann (1986) figuring out implications of the ‘new international division of labour’, and by Sassen (1991) trying to understand ‘the composition of globalization’. Neither Friedmann (1986) nor Sassen (1991) begins with, or develops, a theory of cities per se. What cities are and how they relate to one another, are questions that are left unexamined except as a vague hierarchical premise. It is the latter that leads to the privileging of the few. Taylor has recently argued that this situation can be rectified through a confrontation of the idea of a world city network with the ideas of Jane Jacobs (1970, 1984, 2000) who treats cities as key economic entities. For Jacobs, vibrant cities expand economic life in ways that diversify economic processes within the city (she calls them ‘the little movements’) that in turn lead to complex relations with other cities (she calls these the ‘big wheels’ of commerce). Such a new conceptual context also recognizes Robinson’s (2005: 757) emphasis on the inherent complexity of cities. Following this line of argument, the use of advanced producer services to define the world city network is not that they encompass most or even a sizeable proportion of the myriad complex flows between cities, rather it is that, as cutting-edge industries, they are critical indicators of vibrancy in the Jacobs sense (Taylor, 2006a). Today, where there are concentrations of advanced producer services, there is manifest expansion of economic life. These specialist services vary greatly across cities but they are to be found in one form or another in every city; they are integral to ‘city-ness’ ( Taylor, 2006b).
Underlying both limitations and critiques of the world cities literature is the idea that these studies have largely failed to transcend their prime scale of interest, the global. World city studies need to address leading cities in the global economy to be sure, but there is no need to be ghettoized into one-scale analysis. Quite simply, the world city network is built upon ramifications of operations across different scales through macro-regional and national to local (Parnreiter, 2003). Although recent attempts to analyse the city network in greater geographical detail (Brown et al. 2002; Parnreiter, 2002; Derudder et al., 2003; Taylor and Derudder, 2004, Rossi and Taylor, 2005, 2006) have extended our understanding beyond a limited number of leading cities, they fail to explain the connection to other scales. That is, these analyses are the end-result of ever-larger data sets that depart from the logic of considering only the nodes at the global scale, but they are weak at revealing the way in which urban networks at national and regional scales are connected to the wider world city network.
III. Synthesizing world city network and global commodity chain research
III.1. World City Network and Global Commodity Chain Research: Parallels and Disjunctures
Global commodity chain and world city network research analyze two types of trans-state, multidimensional networks created by firms, and, as such, they represent new material spatialities that may help capturing and refining concepts such as the ‘new international division of labour’ and ‘globalization’. While firms organizing and/or controlling commodity chains are typically large multinational corporations in manufacturing or agro-food industries, the network of world cities is tied together through providers of advanced services that tend to be large multinational corporations in their own right. Surprisingly, there has been little, if any, cross-fertilization between both strands of research. Though both concepts have – to a greater or lesser extent – their theoretical foundations in world-systems analysis, the two strands of literature developed independently. Thus although core-periphery distinctions are central to global commodity chain analysis, so far, allusions to links between the world city network and core-periphery patterns resulting from myriad commodity chains are limited to their apparent (if not commonsensical) coincidence. The real linkages remain obscure and are passed over in silence10.
For instance, in the seminal paper that was one of the world cities literature’s original texts, Friedmann (1986) explicitly invokes world-systems analysis in his hierarchical classification of cities through including a division between cities in ‘core countries’ and cities in ‘semi-peripheral countries’. But the world-systems analysis Friedmann calls upon remains at this basic conceptual level, there is nothing on how cities are implicated in the creation of core-periphery structures through commodity chains. Cities are described as ‘control and command centres’ through their housing of multinational corporate headquarters, but how this translates into the operation of and control over commodity chains is not broached. Saey (1996: 122, translated from the original) has therefore questioned whether the apparent spatial correlation between world city-formation and core processes is in and by itself sufficient to speak of a systematic relation between both structures:
World city researchers (…) often refer to Wallerstein’s world-systems analysis. A closer look, however, reveals that it would be wrong to designate the latter theory as the theoretical foundation of world city research. Setting aside a number of exceptions, world city research limits itself to adopting a tripolar world-system (core, semi-periphery, periphery) defined on the basis of transnational divisions of labor and commodity chains. One can hardly speak of an analytical cross-fertilization.
At the most basic level, the critique by Saey can be traced back to his dismay over the fact that the conceptual link between the world city network and core processes in a capitalist world-system is limited to their apparent coincidence11. As a consequence, it can be noted that the title of Knox and Taylor’s World Cities in a World-System (1995) reflects an ambition rather than a reality. However, as noted in the previous section, Taylor (2004a, 2006a, 2006b) has recently brought back world-systems categories into the study of world cities by using Jane Jacobs’ categories of economically dynamic and stagnant cities, albeit again without reference to commodity chains themselves.
Parnreiter (2003) has addressed the problematic absence of conceptual linkages between both approaches in more depth in an analysis of world city formation in Mexico City and Santiago de Chile. On the one hand, the presented empirical evidence of ever-increasing levels of export production and foreign investment suggests that the so-called national economies of Chile and Mexico are characterized by an increasing integration in global commodity chains. On the other hand, there is evidence suggesting that the city economies of Santiago de Chile and Mexico City are well connected in the transnational networks created by globally organized producer service firms (Beaverstock et al., 1999; Derudder et al., 2003). However, although both analytical frameworks may do a decent job in documenting the position of the chains/cities respectively and their links may seem obvious, the latter relations have been assumed rather than shown. Put differently: we know that Mexico and Chile are increasingly integrated in a variety of global commodity chains, and we also know that globally organized advanced producer services are highly centralized in Mexico City and in Santiago, but we do not know whether advanced producer services in both cities are essential in articulating production in the two countries with the world market - the latter remains an assumption.
For one thing, this clearly shows a need for at least a dialogue between the two literatures with a view to a possible, eventual integration. In the following pages we will assess the possible benefits of such integration in detail, but as a starting point it can be noted that both models can improve each other. Indeed, although the overall objective of this paper is directed towards producing a synthesis of two spatial models of contemporary globalization processes, it can be noted that the potential usefulness of bringing both literatures together is not solely confined to a genuine theoretical integration. By spatializing commodity chains, for instance, one may draw attention to inter-city relations beyond the key world cities, since these commodity chains reveal how many smaller cities and towns are connected to the world city network through the various flows of capital, labor, goods, services, etc. These flows may be the results of strategic behavior of firms, technological and organizational innovations, asymmetric market power relationships and policies at the (supra-) national, regional and local levels. Global commodity chains do explicitly include the stages of primary production, which are located in rural areas and related to city-based transformation and trade processes. Such an examination may thus help to develop a more spatially refined analysis of the world city network, depicting also the specific roles of those cities seemingly at the margins of the world city network (see Robinson, 2002). In order to do this, the data on the location strategies of individual companies may be extended with information on the geography of their clients (thus grasping backward and forward linkages). GaWC data12, for instance, provides information on location strategies of globally organized advanced producer services firms, but these data do not give specific information on how national or regional urban networks are connected to this global network. To this end, we would need data on the geographic location of the clients of advanced producer firms (see Rossi et al. (2006) and the discussion of Parnreiter et al. (2005) in the next section).
World city network research, in turn, may help global commodity chain research in understanding the crucial role of producer services in setting up and sustaining global networks of production. A world city can be seen as a very specific and critical node within commodity chains, precisely for its insertion of advanced services into the production process13. Thus, every world city is a service node in and for a myriad of chains, thereby obtaining its overall centrality. Our contention is that it is service intermediaries, the so-called producer services, located in world cities which maintain the connections between the networks of world cities and commodity chains. The innovation here is the assertion that service intermediaries, which provide the connectivity within urban networks, are also of particular significance for the efficient functioning of global commodity chains because they offer key inputs. From a bank’s initial lending of capital to initiate production, to the use of an advertising agency’s services to facilitate final consumption, the provision of producer services through cities is essential in linking dispersed production and consumption sites and, therefore, to the successful operation of commodity chains (Figure 2).
Figure 2: Separate model enhancement – world city network analysis as input for global commodity chain analysis.
Thus the two spatial models can operate as tools to improve each other. But this does not fully overcome the partial nature of each approach. The question that arises is: how far can we move beyond these inter-model links towards a deeper integration? The remainder of this paper addresses this question. We first explore the issue of model integration in pure conceptual terms, and then try to ground this abstract discussion through an examination of two instances in which model integration may enhance our understanding of the complex spatialities of globalization.
III.2. Model Integration: Conceptual Discussion
Integrating the two spatial models may be achieved by focusing on the social processes underlying both global commodity chain formation and world city formation. Our stance is that these common processes are the core-periphery structures (we explain our use of these terms below) whose mechanisms shape both types of networks. In order to begin this process we go back to the theoretical context from where both literatures first emerged: world-systems analysis. In particular we treat the creation of core-periphery structures as processes whose mechanisms can be found in both global commodity chain and world city network formations.
Core-periphery models abound in the social sciences and are often criticized because of their simplistic dualism. We contend that such criticism misunderstands the nature of core-periphery thinking, at least in world-systems analysis and certain strands of dependency theory (e.g. Frank, 1969). The key point about core and periphery in world-systems analysis is that they are not unchanging geographical categories, rather they are social processes. At the simplest level, core and periphery can be seen as bundles of systemic mechanisms which create contrary outcomes. Core processes are associated with relatively high wage, high tech, high profit inputs and outcomes (e.g. the work of lead firms in managing commodity chains is an example of a core mechanism), peripheral processes are associated with the opposite. The meaning of ‘high’ and ‘low’ varies immensely over time and space, as do the specific mechanisms behind each process; one feature of these processes is that, historically, they have tended to concentrate and segregate (reflecting the evolution of market power, entry barriers and forms of chain governance). This produces places where core processes dominate and where peripheral processes dominate. For short-hand purposes these may be designated as ‘core’ and ‘periphery’ but they must never be seen as purely one or the other: so-called ‘core countries’ encompass numerous, if minority, peripheral processes; and the opposite is so for ‘peripheral countries’. Thus Wallerstein’s (1979, 2004) conceptualization, far from producing a simple ‘dual world’, suggests a most complex geography of interweaving contrary processes based upon a quite sophisticated social model. In some places the contrary processes are approximately balanced – the concentration/segregation has not transpired – and with no dominant processes, the outcome is referred to as semi-periphery. Thus while semi-peripheral places can be identified, it is important to note that there are no semi-peripheral processes, this state is just a geographical outcome.
The important point here is that the core-periphery model is central to both global commodity chain and world city network analysis. As regards global commodity chain analysis, a major reason for using the model is to trace chains across the core-periphery boundary to expose the inequities of the geographies of how value is added and profit taken within the chain. This is, however, not necessarily the geography of the state mosaic world. Rather, the geographies through which commodity chains operate are much more complex. The mix of processes at any node location of the chain can be empirically categorized as ‘core’, ‘periphery’ or ‘semi-periphery’, depending on which processes are dominant14. In the case of world city network analysis delineating core/semi-periphery/periphery by state jurisdictions has been replaced by city-based delimitations. Given the equation between Jacobs’s economic expansion through dynamic cities and Wallerstein’s core-making processes, and adding “dependent urbanization”, as Castells (1977) put it, or “uneven urbanization”, as rather the same set of phenomena was called by Smith (1996)15, as the prime peripheralizing process in globalization, the structure of the contemporary world-economy can be described as follows. The core is defined as locales where core processes dominate: the cities and city-regions of the three ‘globalization arenas’ – northern America, Pacific Asia and Western Europe. The semi-periphery is defined as locales where the two processes are both strong: the cities and city-regions beyond these arenas where both dynamic world city processes and dependent urbanization is taking place. The periphery is defined as locales where peripheral processes dominate in the deruralification end of uneven urbanization processes: the world beyond the world city network ( Taylor, 2005). More generally peripheralization can be equated with Jacobs (1984) description of the pernicious effects of dynamic cities on vulnerable locales beyond their city-region in an extension of Frank’s (1969) dependency thesis. Obviously this revision of core-periphery model takes the interweaving of the two processes to a more complicated geography than the usual definitions employing states as the constituents of the spatial categories (e.g. Arrighi and Drangel, 1986; Terlouw, 1992). This interpretation replaces the weak use of world-systems terminology in Friedmann (1986) where ‘core ‘ cities are designated because they are located in ‘core countries’. Note, however, that Friedmann’s identification of social polarization in his ‘core world cities’ does indicate the existence of peripheral processes there, core processes dominate these cities but do not constitute them.
What are the implications of this for integrating global commodity flows with the world city network? First, basically all global commodity flows in the world-economy include core-formation processes, and that is why the chain cannot be initiated and sustained without world cities, wherever they may be located. These processes are needed to exercise control over commodity chains. Commodity flow branches bring value in from cities at all nodes and this leads to further consequent flows of profits to cities. Second, all cities are integrated into commodity chains, and that is how they are connected to the world city network, even if their own input into the chain is only of peripheral character. Thus, it is only from being within such spaces of flows that cities can be sustained within the world-economy. Put differently: if the global commodity chain approach is correct in stating that value adding activities take on the form of global chains and if the world city literature is right in maintaining that world cities articulate local, regional and national economies into the world-economy, then there have to be intersections between the spaces of flows stretching between world cities and the spaces of flows created through global commodity chains. Global commodity chains and the world city network are therefore integral to the spatiality that is the capitalist world-economy.
These necessary intersections between both models are summarized in Figures 3-5. Figures 3 and 4 elaborate the suggested cross-fertilization from the standpoint of commodity chains and city networks respectively: Figure 3 shows how cities play a crucial role in commodity chains through their dual function of servicing producers and final consumption, while Figure 4 shows how the operation of commodity chains is facilitated by myriad service provisions from cities. An office in one city might, for instance, service a production node in its hinterland (e.g. a city financing the beginning of one chain and providing the advertising for the other chain), while on other occasions expertise from more than one office is used to service a producer (e.g. the advertising for the right hand chain is more complex and brings in expertise from offices in both cities; similarly the latter chain requires a multi-office legal services (inter-jurisdictional) whereas the right hand chain uses a law firm from its local city for a uni-jurisdictional legal requirement). Figure 5 depicts the eventual and indispensable intersection between both models.
Figure 3: Model integration - one commodity chain and two world cities.
Figure 4: Model integration - one world city network dyad and two commodity chains.
Figure 5: Integration of global commodity chain and world city network analysis.
III.3. Cases for Model Integration
This paper is by its nature preliminary, and as such it does not draw upon detailed integration work conducted by the authors on specific cities or within particular commodity chains. Nonetheless, it is worth exploring some of the issues that we have raised in the previous section in relation to two examples. The first one evolves around the question of secondary cities in the world city network, the second around one particular commodity chain, the coffee chain. These cases serve as a way of illustrating some of the benefits, which a growing interaction between commodity chain and world city network research might produce.
III.3.a. Commodity chains and producer services in Latin America
Our first case to illustrate some of the benefits resulting from an interaction between commodity chain and world city network research is derived from research on world city formation in Latin America (Parnreiter, 2002, 2003). As suggested earlier in this paper, these studies show increasing levels of economic globalization in Mexico and Chile, while they equally confirm that the capital cities in both countries are being transformed into nodes between the “national” and the “global” economy. The main shortcoming of both studies is that they do not offer insight in the role of advanced producer service firms located in Mexico City and Santiago de Chile in articulating production with the world market. However, if world city-ness is to be understood as a process (i.e. providing advanced services for making global production feasible), then the multifaceted links between firms whose economic activities are geared towards the world market and service providers in a specific city have to be revealed.
In order to overcome this limitation, Parnreiter et al. (2005) set out to explore one particular connection between production networks and the world city network through a study of the involvement of (local and global) financial institutions in issuing of bonds and shares of leading corporations in Mexico and Chile, starting from the assumption that the provision of this kind of financial service represents an important input for the functioning of a commodity chain. Identifying the financial institutions and their locational strategies involved in stock-market transactions in the two countries should allow for identifying an important link between production networks and the world city network as depicted in Figure 5. The results of this study show that between 1982 and 2004 most of the bond and share issues of the 50 top ranked Mexican and Chilean enterprises16 were handled by global financial institutions such as Citibank/Citigroup, JP Morgan/Chase Manhattan, Bank of New York, Banco Santander or ING Bank. More importantly, however, it was shown that the big corporations in Mexico and in Chile prefer those global financial institutions that also have offices in Mexico City and/or Santiago de Chile. Demand for financial service intermediaries is, therefore, concentrated in firms operating both at a global and a local scale. As a result, the locational strategies of banks and other financial institutions can best summarized through the ’glocalization’ concept (Swyngedouw, 1997)17. In the Mexican case, for instance, very few firms involved in bond and share issues are not represented in Mexico city (e.g. Bear Sterns, Kredietbank Luxembourg). Moreover, financial institutions with no local office issued far less bonds and shares than companies with local presence. In total, less than 10 per cent of the transactions analyzed were realized by firms without an office in Mexico City. In Chile the overall picture is the same, although the involvement of global financial institutions without local offices is slightly higher, making for a fourth of all transactions analyzed. Furthermore, amongst the clients of the US and (particularly in the Chilean case) Spanish based banks located in Mexico City and Santiago de Chile, we find the most important companies operating in the two countries. Citibank/Citigroup, for example, services four of the Top 10 firms in Mexico and two of the Top 10 in Chile, while JP Morgan/Chase Manhattan provides financial services to three of the Top 10 firms in Mexico and to four of the Top 10 in Chile.
Parnreiter et al. (2005) attribute this preference for ‘glocal’ financial institutions to several factors. First, leading companies in Mexico and Chile seek out banks with sufficient global experience in order to place bond and share issues at major financial markets (in this case New York, Luxembourg, Frankfurt). Second, it is reasonable to assume that the Mexican branch of a transnational company chooses a bank already involved in stock market transactions of the headquarter in, say, the United States. Third, the importance of a local office lies in so-called “soft” factors, such as the initiation of business deals, an in-depth analysis of the company that sets out to issue bonds or shares, preparation of the “pitch material” (information on financial position, investment strategies, profile of costumers, production description, etc.).
By selling their services to leading corporations in Mexico and Chile, global financial institutions with local presence provide key inputs for several global commodity chains. For example, by enabling investment for the Mexican oil company PEMEX or the Chilean copper company Codelco through bonds and shares at stock markets, Citibank/Citigroup contributes to two key raw material chains. The same bank, however, sells financial services to major retailers (e.g. Wallmart Mexico, Controlada Comercial Mexicana), which themselves form part of different commodity chains. Citibank/Citigroup acts therefore not only as an inter-locker in the world city network (as posited by the GaWC-group), but also in several commodity chains. By playing a crucial role in both networks, ‘glocalized’ financial institutions provide the indispensable connection between the world city network and global commodity chains. Although the study by Parnreiter et al. (2005) is limited to a specific case study and a specific world region, they are able to show how both types of trans-state networks overlap and interact: all global commodity chains somehow ‘run’ through world cities, and all cities are integrated into commodity chains.
III.3.b. The Coffee Commodity Chain
The second example we have settled upon is that of the coffee commodity chain. We have chosen to briefly explore the dynamics of this chain because, not only does it constitute a traditional primary commodity with long established systems of supply and demand across the globe, but it is also currently an arena of rapid change including major price movements, significant readjustments in the distribution of income amongst the various participants within the chain (as the industry has been still further globalized) and major transformations in both how the final product is marketed and where (Talbot, 2004: Daviron and Ponte, 2005). All of these factors mean that an examination of the coffee commodity chain involves consideration of, not only the strategies articulated by some of the world’s largest trading companies and retailing sectors, but also the circumstances facing some of the poorest agricultural producers on the planet (Pelupessy, 1993: 147-69; 2001: 75-93). It is also one of the better researched global commodity chains and offers some interesting food for thought on exploring the connections between those chains and the world city network within which they are situated, particularly because of the crucial role of advertising within the generation of market-share and profit distribution within the sector.
As suggested above, the coffee commodity chain has been undergoing considerable transformation in recent years. It remains a hugely important sector. About two and a half billion cups of coffee are drunk every day and it remains the most heavily traded commodity globally apart from oil. Indeed, it would be difficult to imagine any high-level meeting taking place in the offices of major corporations in the key global cities running smoothly without coffee! Consumers in importing countries spend roughly 40 billions US dollars annually, while future coffee markets move 100 billion USD per year (estimates based on ICO Statistics on their website). Altogether about 25 million people work within the industry and coffee is grown in over fifty countries (Fitter and Kaplinsky, 2001). A number of studies have attempted to apply a commodity chain (or value chain) analysis to the sector (Pelupessy, 1999; Fitter and Kaplinsky, 2001; Talbot, 2004; Daviron and Ponte, 2005). An example of the depiction of the various actors that constitute the sector, the connections between them and resulting value distribution is shown in Figures 6 and 7. In their analyses of recent trends within the industry (the growing crisis facing the majority of producers and those who work for them), the studies stress the strengthening of the position of the major roasting companies vis-à-vis the trading companies. More than 60 percent of world coffee sales to final consumers are accounted for by the four largest of these roasting companies (Nestlé, Philip Morris (Jacob/Kraft), Sara Lee and Proctor and Gamble) (Talbot, 2004: 103-4). One study cited by Oxfam (2002) suggests that there is no other food/beverage product-group where profitability is anything like that currently being enjoyed by the roasting companies and reported that on average Nestlé makes 26p profit on every £1 of instant coffee sold. They have achieved this level of profitability through taking advantage of over-supply, an increased technical flexibility in blending coffee from different sources (downplaying the importance of particular types of coffee and those who produce it) and the implementation of SIM (supplier-managed inventory) which has passed risk on to the other participants within the chain (Ponte, 2002).
Figure 6: The coffee value chain ( Fitter and Kaplinsky, 2001).
Figure 7: General structure of the global coffee-marketing chain (Ponte, 2002).
The concentration in the world export and import markets of green coffee is similar: the five largest multinational traders control more than 40 percent (Talbot, 2004: 105). Financial capital plays an important role in the increasing concentration of both roasting and international trading of coffee.
The over-supply of green coffee globally has taken place because of the combination of the collapse of the International Coffee agreement ( ICA) in 1989, the accelerated growth of big producers (particularly Brasil and Vietnam) and the World Bank’s advocacy of increasing primary commodity exports. The ICA had kept coffee prices relatively high via price bands and production quotas, but since its demise production has increased by about 15%. The declining position of coffee growers is illustrated well by the fact that in the 1970s somewhere between 20 and 30% of total income was retained by them, by 1995 that figure had fallen to 15% and the figure is as low as 10% by 2001 ( Talbot, 2004: 166-9). Although international prices had recovered with about 30 percent in 2004/5, they are still well below those of the 1970s.Local exporters and marketing companies have also faced extremely difficult conditions over the same period for the increasing concentration of such activities into the hands of larger international trading companies. The SMI system has led to traders as Neumann Gruppe and Volcafe, strengthening their supply network through co-ventures or vertical integration with local exporters and, in some cases, increasing involvement in local purchasing and even production. Interestingly, despite the massive role that supermarkets play within the retail of coffee, the roasting companies have managed to maintain strong control of the coffee commodity chain (in contrast to the dominance of supermarkets in other food sectors). This has been achieved particularly through massive investment in advertising, bonus systems to maintain brand loyalty, blending and other non-price competition instruments (Pelupessy and Díaz, 2006).
Despite the strength of their position, the roasting companies are not without their worries. Recent years have seen an increasing differentiation in the ways in which coffee is marketed and the entrance of new speciality coffees, new places to drink new types of coffees (the Starbucks explosion in the US, UK and other developed and developing countries) and the gradual expansion in the market for ‘conscious’ coffees – be they organic or ‘fair trade’ in orientation. As Daviron and Ponte (2005: 220-72) put it, the appearance of these new consumption patter ns, with the growing importance of conscious consumption, single origin coffees, the proliferation of café chains and speciality shops, and increasing out of home consumption poses new challenges to roasters who are used to selling large quantities of relatively homogenous and undifferentiated blends. However, it should be noted that more than 90 percent of consumers’ coffee is dominated by the ‘mass’ blends. Even highly priced quality brands as the Italian Illy and Segafredo are using blends (Pelupessy and Díaz, 2006).
The commodity chain approach towards analysis of the coffee industry has been crucial in shedding light on the role that different actors play in the connections that link the producers and the consumers of coffee. In particular, it demonstrates the importance of looking beyond simple questions of supply and demand to the changing regimes of regulation that hold sway within the industry (Daviron and Ponte, 2005: 83-126). It is not enough, for example, to locate the current crisis within a general problematic of over-production (although it is important); but rather the key point is that the institutional framework has moved away from a public and relatively stable system toward one that is private and buyer dominated Moreover, whilst the changes in the sector clearly bear the imprint of novel corporate strategies and changing consumption patterns in the North, they are also intimately connected to the process of neo-liberal reform in the South. Austerity reforms via structural adjustment have robbed small growers of access to credit and state-sponsored marketing and extension services. As such, now “producers sell only atomistically into commodity markets. These atomistic producers lack the capacity to combine forces (as do their governments, although the reasons for this are more problematic) (Fitter and Kaplinsky, 2001). It is this more than anything that lies behind the crisis facing coffee producing areas today In the 2000s these areas are characterized by rampant malnutrition, high levels of migration, declining school enrolments and so on (Oxfam, 2002). However, poverty had never been absent from coffee zones, as had been shown by fieldword in the beginning 1990s in El Salvador (Pelupessy, 1993: 147-69).
Nevertheless, for all the strengths of commodity chain analysis, our contention is that there are some limitations and omissions. A quick glance at Figures 6 and 7 immediately confirms our earlier point about the lack of attention paid to the ways in which the coffee commodity chain connects to other parts of the global economy and how those relationships have helped to shape the transformations in the industry explored here. Nowhere on the diagrams (as well as in other studies) is there recognition of the critical role of finance in the various stages of the production cycle (how it is obtained, managed and safe-guarded at different points along the chain) and the changing relationship between the major players in the sector and the financial markets in the liberalized world of the past couple of decades (particularly in the expanded complexity and reach of trading in futures). There is also no explicit place for advertising agencies except as inputs to either roasting or trading activities in either diagram. To an extent, this is because of the way in which commodity chain analysis has tended to treat services as separate chains within which knowledge is the commodity traded (Clancy, 1998; Rabach and Kim, 1994). However to do so in the case of producer services has the effect of isolating the analysis of individual commodity chains such as coffee from the necessary service providers who enable the development and reproduction of the chain. Furthermore, it is worth reiterating that these are producer services and, as such, their knowledge commodity is not an end product in itself. Producer service knowledge commodities feed into other commodity chains that do lead to a final realization of capital. It is our assertion, therefore, that in order to deepen our understanding of the changing dynamics of the coffee commodity chain, we need to find ways of effectively integrating the role of producer service providers into our analysis as depicted in Figure 5.
In a more general way, an engagement with the world city network literature can add a more complete spatiality to commodity chain approaches towards coffee. The four major roasting companies are major global corporations and their myriad engagements within globalization are exceedingly complex. This global complexity is managed through headquarter and other governance levels as part of the command and control functions of world cities (Friedmann 1986). These are the ‘decision’ cities through which advanced producer services are contracted (Rossi et al., 2006). These services are carried out in ‘service’ cities where the professional, creative and financial work takes place. It is this work that, to a large extent, makes possible the operation of the coffee commodity chains. A company like Nestlé will support its coffee commodity chains using: banking/financial corporations, both local and global, in order to fund expansions; both insurance and law firms will be engaged for all projects that entail any risk; accountants and management consultants will be used to audit accounts and enhance profit margins to enhance shareholder dividend; advertising agencies are crucial to marketing both nationally and globally. Of course, Nestlé is not an amorphous global corporation, it is European-based and this origin will affect both its market scope (ends of commodity chains) and its ties to service providers located in Europe’s leading cities. Thus, every stage in the commodity chain will involve professional, creative or financial inputs from cities, sometimes cities adjacent to the chain, other times major cities away from the chain (for example the use of major advertising agencies in New York or major insurance corporations in London).
In addition to this extant complexity, the markets are themselves highly dynamic, creating new threats and opportunities that the roasting companies have to respond to with the help of their global service providers. Moreover, it is the commercial milieu of the cities of the global city network itself where the consumption styles of urban consumers are created and recreated, which suggests that there are more points of contact between commodity chain and world city network approaches than that provided by a new focus upon producer services: by recognizing the increasing consumer orientation of especially buyer-driven global chains (Dolan and Tewari, 2001; Pelupessy and van Kempen, 2005), cities play an essential role in shaping consumers preferences, fashions and habits, which ascertain the flows of information along the chains. Potential points of connection can also be drawn between recent scholarship on consumption and culture in different types of global cities (Krätke, 2003; Jayne, 2005), considerations of the role of advertising and other producer services in creating and adapting new markets for coffee within those spaces and explorations of the changing systems of governance within the coffee commodity chain itself as it readjusts to new circumstances. The recent changes in the marketing of coffee and the proliferation of new products and niche markets is clearly an urban phenomenon but it is one that has a very specific geography. The new coffee bar culture, for example, is definitely an Anglo-Saxon phenomenon, for all of its attempts to ape a more traditional European café culture, whilst the organic and fair trade markets have taken off to different degrees in different locations. Considerable internal changes to the governance of the coffee chain have been occasioned by new entrants into the retail market such as Starbucks and their competitors. These new firms have themselves made considerable use of professional and creative services. It is in major cities that these cutting edge marketing initiatives transforming traditional commodity chains are being developed and diffused. E.g., the almost 12 thousands Starbucks coffee outlets at the present are mainly city located. Thus, the neat circular argument for services beginning in cities at all stages of the chain and capital in the chain being realized through new retailing innovations in cities.
One final point which it is worth making here is that in this section we have focussed mainly upon the ways in which some of the insights of world city network analysis might be used to deepen and diversify existing commodity chain analyses of the coffee sector. At the same time, explorations of how the coffee commodity chain intersects with the network of world cities gives analyses of the latter a much more specific and grounded focus which is also most welcome. As we have pointed out in earlier sections of this paper, world city research has, thus far, tended to focus upon the dynamics of those major cities seemingly at the centre of the world city network. This brief exploratory focus upon coffee shows why such analyses are also crucially important for understanding the dynamics of an industry which connects thousands of poor farmers and agricultural labourers to the global economy. It is also true, of course, that many of the most poorly paid workers in the world cities of the North are to be found working in fast food outlets and coffee houses.
The basic purpose of this paper is to enhance our understanding of contemporary globalization through building a theoretical framework that explores the relationship between the world-wide reorganization of production, service provision and trade, and the simultaneous reshaping of the spatial organization of our world. To fulfil this purpose, we propose to integrate two major global-dimension research literatures that have developed relatively independently, on global commodity chains and world city networks. The ultimate goal is to produce a synthesis of these two models of contemporary globalization processes and this paper is intended as a first step towards that objective. We have argued that both analytic frameworks have things to learn from each other and this can be a springboard to possible, eventual integration. We envisage such integration as emanating from a return to the roots of the studies of both commodity chains and world cities in world-systems analysis. Wallerstein’s core-periphery model is central to commodity chain analysis and was used to classify world cities at the inception of growth in that literature. We have noted that this model has been criticised for its limited geography. Dicken et al (2001: 99-100) have explicitly complained about the ‘world-systems ancestry’ of commodity chain analysis which led to categorizing countries as ‘core’ and ‘periphery’ and Leslie and Reimer (1999: 404) objected to the ‘highly dualistic language’ that leads to a ‘surface level’ geography. We have argued that these criticisms are based upon a misunderstanding of the subtleties of the core and periphery concepts in world-systems analysis. As social processes creating complex geographies, we have shown that this particular core-periphery model is an ideal starting point to integrating commodity chains and city networks grounded in their geographies.
The outcome - a world spatiality of complex cores, semi-peripheries and peripheries, formed and sustained by commodity chains that in turn are formed and sustained through a network of world cities - informs the formative concern of the paper: the divergence between metageography and spatiality under conditions of contemporary globalization. We argued that the incongruence between a metageography that emphasizes countries and a network spatiality in which the rise of cities is prominent, requires a challenge to twentieth century global geographies for both their neglect of flows and their insidious geographical distortion of social science understanding of social change. World-systems analysis has long been a leading area of social scholarship for disembedding the state from social knowledge. Our use of this approach for integrating the global commodity chain and the world city network models of spatiality has shown that ‘world-systems ancestry’ is very worth recovering to work alongside other intellectual reformations such as the more recent emphasis on networks.
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1. See, for example, Hudson (2004) and the papers produced by Dicken and his colleagues through their ESRC-funded project on global production networks in Europe and east Asia: http://www.sed.manchester.ac.uk/geography/research/gpn/.
2. Our paper is therefore similar in focus to Dicken et al. (2001) but our objectives are somewhat less ambitious than their advocation of a ‘network methodology’ for studying globalization. While we fully support their aims, we are more concerned with synthesizing the basic concepts that inform our understanding of contemporary spatialities. We overlap with their discussion through our consideration of commodity chains but we keep more closely to the world-systems spirit of the initial approach. Rather than simply criticizing the weak geography in the global commodity chains literature (Leslie and Reimer, 1999), however, we attempt to rectify it through a more subtle re-interpretation of world-systems analysis. Dicken et al. (2001) have made the same criticism of global commodity chain analysis, and they have sought to address the limitations of commodity chain analysis through the development of post-structural approaches such as actor network theory, an approach advocated by Smith (2003a,b) for studying world cities. We resist the temptation to synthesize through this approach because we fundamentally disagree with the ontological implications of actor network theory: we think we can incorporate many of the positive aspects of it without accepting the approach itself. Like Dicken et al’s (2001: 107) conclusion – a structural/relational view – we intend to have our cake and eat it with respect to actor network theory .
3. For a very useful historical systematization of trade theories including the so called new trade theories see Appleyard and Field (1997, chapters 2-12).
4. Intra-industry trade accounted for 68.5 percent of U.S. manufacturing trade (1996 – 2000), while in Germany (72 %), the United Kingdom (73.7 %) or France (77.5 %) the share was even higher. Likewise, intra-industry trade increased in middle-income countries such as Mexico (73.4 %), Hungary (72.1 %) and Korea (57.5 %) (OECD 2002).
5. However, subsequently, and perhaps unsurprisingly, the main application of the global commodity chain concept has been in the study of the complexity of contemporary economic production, while the underlying core-(semi-) periphery structure of the world system and the excessive functionalism of the theory were either questioned or omitted from the framework of analysis altogether. The efforts of Gereffi and others are, therefore, not only an attempt to operationalize world-systems analysis for the empirical study of cross-border firm based actions, but also to loosen some of its restrictive assumptions (Henderson et al. 2002: 440).
6. Coe et al. (2004) do point out, however, that there has been a recent recognition in the commodity chain literature of the salience of sub-national scale of analysis for issues of economic development and industrial upgrading (Bair and Gereffi, 2001). A number of recent studies on Latin America, for instance, address the regional and subnational impacts of global chains (Díaz, 2003: 172-193; Sánchez, 2004: 51-76; Giuliani et al., 2005).
7. Recently, however, more attention has been given to the institutional and regulatory framework in the work of Talbot (2004, 67-99), Riain (2004: 642-663), Ponte and Gibbon (2005: 1-31), Rothstein (2005: 49-69) and Muradian and Pelupessy (2005: 2029-44).
8. Of course, there were a few geographers devoted to ‘port geography’, the study of cities through which commodities flowed across the world-economy, but these researchers constituted an non-influential and very small minority of scholars.
9. Much more problematic is Robinson’s (2002) use of the concept of ‘ordinary city’ to describe the neglected cities. Perversely this implies the global/world cities are ‘extraordinary’, potentially reifying them as a different genus! This critical cul de sac has unwittingly highlighted the important limitation of current world cities studies, the poverty of its foundation theory.
10. The relation between urbanization processes and global inequality has, of course, a longer history, e.g. Armstrong and McGee’s (1985) seminal volume in which they reveal how major cities play a crucial role in the process of capital accumulation and of unequal exchange and dependency. Armstrong and McGee show how the flow of capital through the urban system brings net losses to rural areas and further exacerbates income inequalities among regions and classes (see also Timberlake 1985).
11. Taylor (2000: 6), in his analysis of the theoretical and empirical foundations of world city research, has come to a similar conclusion: “ In his initial formulation, John Friedman set world cities within a world-systems framework with cities as the ‘basing points’ of capital in the world-economy. But world-systems analysis implies much more than locating cities in core or semi-periphery.”
12. Globalization and World Cities Group and Network (http://www.lboro.ac.uk/gawc)
13. The focus on cities is also important to understand the changing demand structures and forms of consumer behaviour, which increasingly orientate most (demand-driven) commodity chains (Pelupessy and Van Kempen, 2005: 357-81). The shifts in consumers’ preferences towards non-material or symbolic attributes of goods are introduced and developed in urban areas, and frequently but not always these are related to growing income levels. Most studies fail to reach the final destination, and stop at the shelves of retailers, while prices paid by consumers determine the total value generated along the chain.
14. Core and periphery are also terms that have been adopted in international relations/other political analyses, whereby the differential power of nation states within international negotiations reflects their core/periphery status (e.g. WTO negotiations can be seen as reflecting the differential power of core and peripheral regions).
15. We avoid the term “mega-city” for two reasons. First, in its official – that is: UN – use “mega-city” is strictly quantitative in its content and does therefore not inform about the qualitative characteristics or processes of a city (such as the specific mix of core and peripheral processes). Second, where the term “mega-city” assumes more than a demographic notion, the conception is highly problematic. In the perspective of modernization theory and urban ecology, the study of urbanization in the periphery is cleaned both from political economy and from a global perspective. Instead, by using terms such as “unsound urbanization” or “hyperurbanization”, a direct relationship between population growth and poverty is suggested. Today’s dominant discourse on mega-cities accepted this notion and portrays mega-cities as major global risk areas, characterized mainly by social disorganization, conflicts and crisis.
16. Most of these firms are, however, not „Mexican“ or „Chilean“ in the strict sense of the word, because they are local branches of transnational companies.
17. As HSBC (The Hongkong and Shanghai Banking Corporation) puts it in an advertisement: they strive to be “the world’s local bank”.
Edited and posted on the web on 11th October 2004; last update 23rd March 2007
Note: This Research Bulletin is a source paper for RB 236 and will not be published in its present form.