He , Hansjö g
A icle
C isis o globalisa ion and impe ialis s uc u es
Eu opean Jou nal o Economics and Economic Policies: In e en ion (EJEEP)
P o ided in Coope a ion wi h:
Edwa d Elga Publishing
Sugges ed Ci a ion: He , Hansjö g (2025) : C isis o globalisa ion and impe ialis s uc u es,
Eu opean Jou nal o Economics and Economic Policies: In e en ion (EJEEP), ISSN 2052-7772,
Edwa d Elga Publishing, Chel enham, Vol. 22, Iss. 2, pp. 223-238,
h ps://doi.o g/10.4337/ejeep.2025.0150
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/329938
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In i ed A icle
Recei ed 8 Decembe 2024, accep ed 1 Feb ua y 2025
This is an open access wo k
G ow h models, g ow h s a egies, and powe
blocs in Tu key and Egyp in he wen y- i s
cen u y
Ali Rıza Güngen
Social Sciences, Columbia College, Canada
Ümi Akçay
Ins i u e o In e na ional Poli ical Economy, Be lin School o Economics and Law, Be lin, Ge many
Uemi .Akcay@hw -be lin.de
Analysis o he g ow h pa e ns in he Global Sou h in he wen y- i s cen u y sugges s he e is oom
o au ho i a ian s a es o sea ch o new g ow h models. Au ho i a ian s a es, such as Tu key and
Egyp , bene i ed om global inancial ci cums ances in he ea ly 2000s and expe ienced shi s in
g ow h s a egies in he 2010s, supp essing poli ical space u he . Ou main esea ch ques ion,
hus, is ocusing on wha he main domes ic poli ical economy causes o hese g ow h s a egy and
model changes a e. To explain he changes in g ow h s a egies and models amid he s eng h o ein-
o ced au ho i a ian egimes in hese wo coun ies, we employ a hyb id esea ch s a egy, ying
g ow h model changes o con lic s wi hin he powe bloc. We a gue ha in he mid- o-la e
2010s, pe iphe al goods p oduce s gained he uppe hand in Tu key, while a mili a y akeo e in
Egyp was ollowed by he p omo ion o expo s and new in es men s. We also con end ha powe
bloc econ igu a ions in he las decade and he ise o new g ow h s a egies bo h in Tu key and in
Egyp aimed o change p e ious domes ic demand-led demand and g ow h models.
Keywo ds: compa a i e poli ical economy, g ow h models, g ow h s a egies, Tu key, Egyp
JEL codes: B52, E65, E66, F43, O43, P52
1 INTRODUCTION
Au ho i a ian s a es in Tu key and Egyp eju ena ed hemsel es in he 2010s. This was a
de elopmen con a y o he widesp ead expec a ion ha when aced wi h deep economic
c ises and b ewing social discon en , au ho i a ian egimes a e less likely o main ain hei
powe . This s udy elabo a es on he g ow h models o Tu key and Egyp in he wen y-
i s cen u y. Despi e signi ican di e ences ega ding expo capaci y and mac oeconomic
indica o s, poli ical economic de elopmen s con e ge in a ious aspec s in hese wo coun-
ies. Mo eo e , he au ho i a ian egimes in bo h Tu key and Egyp main ained hei
powe while inc easingly supp essing he poli ical space in he 2010s (Tuğal 2016). We
desc ibe au ho i a ianism as a se o p ac ices ha isola es key policy-making p ocesses
om democ a ic o e sigh and excludes la ge g oups such as wo king classes, e hnic mino-
i ies o subal e n g oups om ins i u ional poli ics (Salgado 2022). F om a c i ical poli-
ical economy pe spec i e, au ho i a ian p ac ices canno be concei ed as clea ly cu om
Resea ch A icle
This isan open access wo k
Recei ed 8 Decembe 2022, accep ed 7 No embe 2023
Eu opean Jou nal o Economics and Economic Policies: In e en ion, Vol. 21 No. 1, 2024, pp. 151–171
Fi s published online: Ap il 2024; doi: 10.4337/ejeep.2024.01.09
Jou nal compila ion © 2024 Edwa d Elga Publishing L d
© 2024 The Au ho
Eu opean Jou nal o Economics and Economic Policies: In e en ion, Vol. 22 No. 2, 2025, pp. 223–238
Fi s published online: Ap il 2025; doi: 10.4337/ejeep.2025.0150
C isis o globalisa ion and impe ialis
s uc u es
Hansjö g He *
HWR Be lin, IPE Be lin, Ge many and FMM Fellow
The aim o he a icle is o show ha al hough mos coun ies in he Global Sou h ha e been able
o educe absolu e po e y, wi h a ew excep ions hey ha e no succeeded in ca ching up wi h he
coun ies o he Global No h. The conclusion o he a icle is ha , especially a e he neolibe al
e olu ion in he 1980s, exploi a i e s uc u es be ween de eloped and less de eloped coun ies ha e
in ensi ied, which in se e al dimensions esemble impe ialism be o e Wo ld Wa I. The expansion
o global alue chains and o eign di ec in es men om he 1990s onwa ds has done no hing o
change his. This esul is explained by a ious heo e ical app oaches – absolu e and compa a i e
cos ad an ages, inc easing economies o scale and global alue chains. Only comp ehensi e indus-
ial policy and ul ima ely an al e na i e model o globalisa ion can change he cu en c isis o
globalisa ion.
Keywo ds: globalisa ion, unde de elopmen , ade heo y, global alue chains, o eign di ec
in es men , impe ialism
JEL classi ica ion: B1, F60, O11
1 INTRODUCTION
Wo ld ade (sum o expo s and impo s o goods and se ices) in pe cen o wo ld GDP
inc eased om 24 pe cen in 1960 o o e 60 pe cen a he beginning o he inancial
c isis 2008 and hen s agna ed a his le el. In 2023, ade o GDP was 63 pe cen in
high-income coun ies, 47 pe cen in uppe middle-income coun ies, 56 pe cen in
lowe middle-income coun ies and 50 pe cen in low-income coun ies (Wo ld Bank
2025). The p omise ha de egula ed and global p oduc and inancial ma ke s lead o
con e gence in he wo ld economy has no been ul illed. This also applies o he inc eas-
ing impo ance o global alue chains (GVCs) including he associa ed inc ease in o eign
di ec in es men (FDI) since he 1990s. Especially he massi e inc ease in FDI has aised
hopes o a apid ca ch-up o all coun ies ollowing a ee ma ke app oach. Expec a ions
we e no ul illed. In many espec s, he cu en cons ella ion is compa able o he anal-
ysis o globalisa ion a he beginning o he 20 h cen u y, which was conduc ed unde
he name o impe ialism. A ha ime, some o he o me colonies, such as he USA,
succeeded in libe a ing hemsel es om he colonial powe s, bu mos o he hen unde -
de eloped coun ies we e unable o ini ia e a ca ch-up p ocess. This a icle will, he e o e,
discuss key poin s o he classical impe ialism deba e and compa e he cu en si ua ion
wi h ha be o e Wo ld Wa I.
* Email: [email p o ec ed].
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The e a e a se e al economic heo ies ha can explain he ailu e o ca ch up o mos
coun ies in he Global Sou h.1 E en he basic heo ies o in e na ional ade, absolu e
and compa a i e ad an ages, p o ide con incing a gumen s o he di icul ies o ca ch-up
de elopmen . Mo e mode n ade heo ies complemen he a gumen by aking econo-
mies o scale in o accoun . In many a eas, GVCs a e a he cen e o in e na ional ade.
This places powe asymme ies and he e ec s o FDI a he cen e o he analysis. In his
a icle, absolu e and compa a i e ad an ages, inc easing economies o scale and he e ec s
o GVCs will be analysed o de e mine he ex en o which hey p o ide a gumen s o he
lack o ca ch-up p ocesses in many coun ies o he Global Sou h.
No discussed in his pape a e de elopmen p oblems linked o cu ency hie a chy,
which include cu encies wi h a low le el o us ypical o coun ies in he Global
Sou h.2 The dependency heo y ha eme ged a e Wo ld Wa II, which a many poin s
comes o simila conclusions as in his a icle, is also no explici ly discussed.3
In Sec ion 2, an o e iew o global de elopmen s is gi en. Sec ion 3 discusses absolu e
and compa a i e ad an ages as well as he e ec s o economies o scale on ade. Sec ion
4 ocuses on GVCs and hei e ec s on de elopmen . I ollows in Sec ion 5 a compa i-
son o he p esen si ua ion wi h he deba e abou impe ialism in he ea ly 20 h cen u y.
Sec ion 6 concludes.
2 A WORLD OF NO CONVERGENCE
Looking a GNI pe capi a measu ed in pu chasing powe pa i y (cons an 2021 in e na-
ional US dolla ), i becomes ob ious ha he e is no economic con e gence in he global
economy (see Figu e 1).4 E en China could no manage o achie e a ca ch-up; howe e ,
he absolu e inc ease in GNI pe capi a be ween 1995 and 2023 was in China almos
he same as in high-income coun ies. In 2019, a ound 16 pe cen o wo ld popula ion
belonged o high-income coun ies, o uppe middle-income coun ies he numbe s we e
34 pe cen , o lowe middle-income coun ies 40 pe cen and o low-income coun ies
9 pe cen (Wo ld Bank 2019). Measu ed in pu chasing powe pa i ies in 2021, US dolla
in 1990 USA had a sha e o wo ld GDP o 20.1 pe cen and China o 3.8 pe cen . In
2023, he igu es we e o he USA 14.9 pe cen and o China 18.8 pe cen (Wo ld
Bank 2025). O cou se, GDP pe capi a is no pe ec measu e o he s age o de elopmen
o a coun y, as, o example, income dis ibu ion wi hin coun ies is no cap u ed. Bu
i indica es how a e age p oduc i i y as he backbone o de elopmen in coun ies o e
longe pe iods de elop.
Popula ion g ow h has been di e en in di e en coun y g oups. In high-income
coun ies, popula ion inc eased om 907 million in 1960 o 1.18 billion in 1990 and o
1.4 billion in 2023. The co esponding igu es o low- and middle-income coun ies a e
1.98 billion, 3.80 billion and 6.87 billion (Wo ld Bank 2025).
1 . The global Sou h is no a homogeneous g oup o coun ies. We use he e m he e o he yp-
ical de eloping coun y ha has been unable o ini ia e a ca ch-up p ocess.
2 . See o his deba e He 2018, He and Ne eko en 2022, De Paula e al. 2024 o Alami e al.
2023.
3 . I is no place he e o discuss he dependency heo y ha has many di e en s eams and
includes also mo e poli ical dimensions. Fo an o e iew abou new de elopmen s in he depen-
dency heo y, see K ang a en (2021) o Po cile e al. (2023).
4 . A cons an in e na ional US dolla buys he same quan i y o goods in all coun ies a cons an
p ices.
C isis o globalisa ion and impe ialis s uc u es 225
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Using pu chasing powe pa i y and in e na ional-US dolla a 2017 p ices income
pe pe son o below $2.15 a day is conside ed as absolu e po e y. Using his measu e,
ex eme po e y dec eases om 40 pe cen o wo ld popula ion in 1990 o 9 pe cen
in 2022. Wi hou China, he educ ion was om 28 pe cen in 1990 o 11 pe cen
in 2022 (Wo ld Da a 2024: 1). F om 2018 on, educ ion o ex eme po e y has been
s agna ing. Mo e impo an a e highe po e y lines. ‘A a po e y s anda d mo e ele an
o uppe -middle-income coun ies ($6.85 pe pe son pe day), 44 pe cen o he wo ld’s
popula ion li es in po e y. The numbe o people li ing unde his highe s anda d has
ba ely changed since 1990 due o popula ion g ow h. A he cu en pace o p og ess, i
would ake decades o e adica e ex eme po e y and mo e han a cen u y o li people
abo e $6.85 pe day’ (Wo ld Bank 2024a: 1).
The global Gini coe icien o disposable income was 0.69 in 1980 emained a
a ound his le el un il he ea ly 2000s, hen ell also due o eme ging middle classes in
uppe -middle income coun ies sligh ly o 0.67 in 2022 (Ou Wo ld Da a 2025).5 Weal h
inequali y is, as expec ed, much highe . In 2022, 52.5 pe cen o he wo ld’s adul s had
asse s below $10,000 and a sha e o global weal h o 1.2 pe cen . And 1.1 pe cen o
adul s wi h weal h o e 1 million owned 45.8 pe cen o he wo ld’s weal h. This g oup,
he high-ne -wo h indi iduals, inc eased i s sha e on global weal h om 35 pe cen in
2000 o almos 46 pe cen in 2022 (Sho ocks and Da ies 2023).
To sum up, o e he pas decades, absolu e po e y in he wo ld could be subs an ially
educed, o e all po e y ($6.85 pe pe son pe day) no . Almos all coun ies in he wo ld
could inc ease hei eal GNI pe capi a, also he ex eme poo coun ies. Howe e , abso-
lu e inc eases in GNI pe capi a in high-income coun ies we e much highe han in he
5 . To ge a eeling wha a Gini coe icien o 0.67 means look a he examples in Pike y (2014:
247 .). The op 1 pe cen ge 25 pe cen , he nex 9 pe cen ge 35 pe cen , he middle 40 pe
cen ge 35 pe cen and he bo om 50 pe cen ge 5 pe cen o o al income.
Sou ce: Wo ld Bank (2025).
Figu e 1 G oss na ional income (GNI) pe capi a, pu chasing powe pa i y, cons an 2021
in e na ional US dolla
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es o he wo ld; China is one o he ew excep ions as China could inc ease GNI pe cap-
i a oughly as in high-income coun ies. Due o he high popula ion g ow h in pa s o he
Global Sou h, he sha e o global GDP o high-income coun ies subs an ially dec eased,
wi h he co esponding geopoli ical consequences. Income inequali y on a global le el as
well as weal h inequali y a e ex emely high. O cou se, he Global Sou h is no homoge-
neous g oup. The asymme ical ela ionships be ween coun ies ha a e de eloped below
exis also wi hin he coun ies o he Global Sou h.
3 TRADITIONAL ECONOMIC MODELS
Absolu e and compa a i e ad an ages ep esen he economic co e o he explana ion o
in e na ional ade. Taken o hei logical conclusion, hese app oaches p o ide con inc-
ing a gumen s as o why la ecome s in de elopmen ind i so di icul o each he le el
o de elopmen o he wo ld’s leading coun ies. This is shown in his sec ion. As soon as
economies o scale a e assumed, he app oach o absolu e and compa a i e cos ad an ages
is undamen ally modi ied.6 This aspec is also discussed in his sec ion.
3.1 Absolu e and compa a i e ad an ages
Adam Smi h (1776) de eloped a model o absolu e ad an ages o coun ies. Fo example,
i coun y A has a be e echnology o p oduce manu ac u ing goods and coun y B
has na u al esou ces coun y A does no ha e, i is ob ious ha in e na ional ade will
inc ease he wel a e o bo h coun ies. I is also ob ious ha i he ma ke mechanism is
allowed o wo k he wo coun ies will exchange na u al esou ces agains manu ac u -
ing goods. Da id Rica do (1821) in oduced he concep o compa a i e ad an ages. He
made clea ha in e na ional ade makes sense e en i a coun y has absolu e disad an ages
in all aded goods and se ices. Le us ake compu e s and ga men and assume ha coun-
y A has a echnological ad an age o e coun y B in he p oduc ion o bo h p oduc s,
bu a g ea e ad an age in p oducing compu e s. In his case, ee ade leads o in coun y
o he expo o compu e s and in coun y B o ga men . Fo he same global p oduc ion
olume, in e na ional ade sa es inpu s and inc eases global wel a e. In a s a ic app oach,
Smi h and Rica do ce ainly a e co ec .7 Howe e , he a gumen changes undamen ally
unde a dynamic pe spec i e.
Le us s a wi h absolu e ad an ages. In many cases, coun ies in he Global Sou h
ha e absolu e ad an ages in he ield o na u al esou ces o he cul i a ion o ce ain
ag icul u al p oduc s. Following he ma ke mechanism and concen a e p oduc ion and
6 . This is compa able o he models o pu e and monopolis ic compe i ion, which, unde in e nal
economies o scale, mus make way o oligopolis ic ma ke o ms o monopolies.
7 . On neoclassical basis Eli Hecksche (1919) and Be il Ohlin (1933) explained in e na ional
ade by compa a i e ad an ages, which we e based on di e en endowmen s o capi al and
skilled and unskilled labou . Technological knowledge is assumed o be he same in all coun ies.
De eloping coun ies wi h low le els o capi al and a highe sha e o low-skilled wo ke s will concen-
a e on low-skilled-labou -in ensi e p oduc ions, whe eas de eloped coun ies will concen a e on
high-skilled-capi al-in ensi e p oduc ions. Unde ideal condi ions, ee ade leads o he same emu-
ne a ion o capi al and wo ke s in he whole wo ld (S olpe and Samuelson 1941). Un o una ely,
his canno be seen empi ically (see Sec ion 2). Ob iously echnological knowledge is no he same
in all coun ies.
C isis o globalisa ion and impe ialis s uc u es 227
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expo s on such p oduc s and impo indus ial p oduc s (and high-le el se ices) om
mo e de eloped coun ies is ce ainly no a good ecipe o de elopmen . Co ee plan a-
ions o he cul i a ion o mangoes can ce ainly s imula e he c ea ion o jobs and expo s,
bu hese sec o s will no make a decisi e con ibu ion o he echnological ca ch-up o
an unde de eloped coun y. Big absolu e ad an ages can exis in he expo o na u al
esou ces om oil o li hium. I he coun y expo s na u al esou ces, o he indus ial
sec o he ma ke mechanism leads o an o e alua ion o he exchange a e wi h he esul
ha manu ac u ing goods a e impo ed. Indus ialisa ion will no ake place o su e s and
hus also de elopmen . In addi ion, p ices o na u al esou ces a e e y ola ile c ea ing
shocks o he economy. As ax e enues depend on he na u al esou ce sec o , his ola-
ili y makes sus ainable go e nmen policy di icul . Las no leas in coun ies wi h high
oil and gas ese es, a e ea hs e c., he e is he dange ha eli es y o cap u e he high
en s ea ned, in many cases sha ed wi h o eign mul ina ional companies (Humph eys e
al. 2007; He 2016).
Compa a i e ad an ages o coun ies in he Global Sou h ypically exis in he p o-
duc ion o simple indus ial p oduc s wi h simple echnologies and skills. The p oduc ion
o clo hing o shoes is ypical. This leads o he ou come ha he ma ke mechanism con-
cen a es low- ech, labou -in ensi e and low- alue-adding ac i i ies in he Global Sou h
and high- ech-high-skills and high- alue-adding p oduc ions in he global No h.
Absolu e and compa a i e ad an ages concen a e o de elopmen unp omising sec-
o s in less de eloped coun ies, hus p e en ing an economic ca ch-up p ocess wi h he
wo ld’s leading coun ies. The mos dynamic sec o s a he on ie o inno a ion become
loca ed in he Global No h. In hese sec o s, lea ning and syne gy e ec s, inno a i e
s eng h and alue added a e high and make economies in he Global No h pe manen ly
mo e p oduc i e compa ed o less de eloped coun ies.
F ied ich Lis was one o he i s economis s s essing his poin . ‘I saw clea ly ha ee
compe i ion be ween wo na ions which a e highly ci ilised can only be mu ually bene-
icial in case bo h o hem a e in a nea ly equal posi ion o indus ial de elopmen , and
ha any na ion which owing o mis o unes is behind o he s in indus y, comme ce, and
na iga ion, while she ne e heless possesses he men al and ma e ial means o de eloping
hose acquisi ions, mus i s o all s eng hen he own indi idual powe s, in o de o i
he sel o en e in o ee compe i ion wi h mo e ad anced na ions’ (Lis 1841: xl). And: ‘I
is a e y common cle e de ice ha when anyone has a ained he summi o g ea ness, he
kicks away he ladde by which he has climbed up, in o de o dep i e o he s o he means
o climbing up a e him. In his lies he sec e o he cosmopoli ical doc ine o Adam
Smi h … and o all his successo s in he B i ish Go e nmen adminis a ions’ (Lis 1841:
295 .). I is wo h emembe ing ha be o e England ad oca ed ee ade, i de eloped
h ough p o ec ionis measu es (Chang 2002).
Paul K ugman (1981), aking economies o scale in o accoun , added an impo -
an a gumen . Inno a ions and p oduc i i y de elopmen in gene al a e d i en by he
so-called ex e nal economies o scale. Examples a e he Silicon Valley clus e , he Yokohama
Mi subishi clus e , he Shenzhen–Hong Kong–Guangzhou clus e o he Munich-BMW
clus e . Such clus e s ha e in common ha hey a e a ne wo k o echnological leading
i ms wi h high-skilled employees, closely connec ed supplie s, close collabo a ion be ween
i ms wi h esea ch ins i u es and uni e si ies, a pool o quali ied labou and a good in a-
s uc u e and go e nmen suppo . In clus e s be ween i ms, ypically a mix be ween
coope a ion and compe i ion exis s. Clus e s a e cen es o posi i e ex e nal e ec s, which
esul om syne gy and ne wo k e ec s and ocused go e nmen suppo .
The p oblem is ha ‘a small “head” s a o one egion will cumula e o e ime, wi h
expo s o manu ac u es om he leading egion c owding ou he indus ial sec o in
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he lagging egion. This p ocess, I would a gue, cap u es he essence o he a gumen
ha ade wi h de eloped na ions p e en s indus ialisa ion in less-de eloped coun ies’
(K ugman 1981: 149). Based on his a gumen , K ugman de elops a model ha shows
ha he ma ke mechanism concen a es inno a i e powe in he Global No h. Based
on he ma ke mechanism, less de eloped coun ies ha e no chance o ca ch-up. He also
poin ed ou ha o maximise p o i s i ms in he Global No h a a ce ain de elopmen
s age ca y ou FDI in he Global Sou h o p oduce simple goods cos e ec i ely.
The a gumen becomes e en s onge when in e nal economies o scale a e added. The
la e leads o eno mous ad an ages o ea ly mo e s and o oligopolis ic ma ke s o e en
monopolies. In such ma ke o ms, en s by i ms a e high and p o i s a e gene a ed based
on ma ke powe . Economic clus e s hen include he in e ac ion be ween la ge and small
companies, bo h wi h po en ially high inno a ion capaci y. In such ma ke s, he en y o
la ecome s by pu e ma ke p ocesses is almos excluded.
4 GLOBAL VALUE CHAINS
In GVCs, new dimensions o in e na ional ade come in o play. This is because in GVCs
asymme ic powe ela ions exis and FDI is subs an ially s imula ed. And, as al eady
emphasised, he e a e high hopes o FDI as a channel o ca ch-up. The logic o GVCs
is ha he p oduc ion o a p oduc including se ices is cu in di e en asks, which a e
p oduced in a ious coun ies. In case o FDI p oduc ion o supplies akes place in subsid-
ia ies, in case o subcon ac ing in legally independen supplie s.8
The Wo ld Bank (2022: 19) calcula ed ha in 1970 he sha e o GVCs in he o al
olume o global ade was a ound 36 pe cen , hen inc eased o 52 pe cen a he begin-
ning o he inancial c isis in 2008 and hen s agna ed. FDI ollowed a simila end. F om
1970 o he mid-1980s, i was ba ely highe han 0.5 pe cen o wo ld GDP. Then he e
was a sha p ise wi h spikes o 4.6 pe cen in 2000 and 5.3 pe cen o GDP in 2007,
a e which FDI as a pe cen age o GDP ell o ela i ely low le els (2023 o 0.75 pe cen )
(Mac o ends 2025).
In he cen e o GVCs a e mul ina ional companies (MNCs) as lead i ms and o gan-
ise s o p oduc and inancial lows in GVCs. Taking he 10,209 la ges companies in
he wo ld in 2024 measu ed in e ms o hei ma ke capi alisa ion in US dolla , 3,703
o hem come om he USA, 2,781 om he EU including Swi ze land, he UK and
No way. O he de eloped indus ialised coun ies such as Japan, Canada, Sou h Ko ea
and Taiwan accoun o 1,743 MNCs, A ab oil coun ies o 565 and Hong Kong and
Singapo e o 222. F om he emaining 1,175 MNCs, 588 come om India and 321
om China (CompaniesMa ke cap.com 2024). In indus ial p oduc ion, MNCs a e hus
loca ed o an ex eme ex en in he Global No h, wi h India and China he only bigge
excep ions.
The e a e wo ypes o GVCs, howe e , depending on he p oduc o se ice many
di e en a ia ions in be ween exis . In one ex eme case, pa s o he inal p oduc a e
p oduced in di e en coun ies by specialis i ms and in he lead i m he a ious pa s a e
assembled. An example is he p oduc ion o ai planes. Mo e ypical and mo e impo an
o he Global Sou h is he case when a lead i m wi h he mo i a ion o cu cos s ou -
sou ces a ious p oduc ion s ages o a p oduc o di e en coun ies. An example is he
ga men indus y when, o example, wea ing, dying, cu ing o sewing is ou sou ced o
8 . This sec ion is based on Dünhaup and He (2022) and Dünhaup e al. (2022).
C isis o globalisa ion and impe ialis s uc u es 229
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di e en coun ies. An example is also he Apple iPhone whe e he p oduc ion o ha d-
wa e by he lead i m is comple ely ou sou ced o o eign coun ies.
4.1 Compa a i e ad an ages in GVCs
The model o compa a i e ad an ages can be applied o GVCs. Simple asks a e ou -
sou ced o coun ies wi h ela i ely low echnological s anda ds, low skill le els o he
wo k o ce and no inno a ion clus e s as in hese coun ies wage cos s as well as cos s a is-
ing om ax paymen s and en i onmen al o occupa ional heal h and sa e y equi emen s
a e ypically lowe han in he home coun y o he lead i m. High quali y asks like
design, b anding, esea ch & de elopmen (R&D) o ma ke ing a e kep in lead i ms.
Lead i ms like Apple and Samsung, o make an example, ake o e so wa e de elopmen ,
design and ma ke ing and cap u e 30–49 pe cen o o al alue added, whe eas assembly
ac i i ies a e ou sou ced o less de eloped coun ies which cap u e only 3–4 pe cen o
o al alue added (Van Assche 2020). Rungi and Del P e e (2018) analysed inancial da a
o wo million i ms and ound wi h some a ia ions he same pa e n.
GVCs ha e been s imula ing indus ialisa ion in some coun ies o he Global Sou h.
Fi s , i is mo e likely o ha e a compa a i e ad an age in he p oduc ion o a simple ask
han in he p oduc ion o a whole p oduc . Second, expo channels a e opened by lead
i ms which o he wise would be di icul o ind. Thi d, ou sou cing o asks can help o
o e come disad an ages in he ield o economies o scale as, wi h he help o lead i ms,
p oduc ion acili ies can ake o e he p oduc ion o la ge olumes.
Mos coun ies in he Global Sou h managed o inc ease employmen in indus y as a
sha e o o al employmen whe eas GVCs ce ainly suppo ed his de elopmen . F om 1991
un il 2022 in he wo ld, he employmen sha e in indus y inc eased om 21 o 24 pe cen .
I emained almos he same in low-income coun ies (9–10 pe cen ), howe e , inc eased
subs an ially in uppe middle-income coun ies (22–28 pe cen ). The inc ease om 14 o
23 pe cen was d ama ic in low middle-income coun ies as well as he decline in high-in-
come coun ies om 31 o 22 pe cen (Wo ld Bank 2025). Thus, we can speak o a dein-
dus ialisa ion in high-income coun ies and a shi o indus ial job o he Global Sou h.
4.2 Go e nance and monopsonis ic s uc u es
T ade in GVCs is no be ween independen anonymous economic uni s, as implici ly
assumed in models o absolu e and compa a i e ad an ages. Ga y Ge e i e al. (2005)
dis inguish be ween i e ypes o go e nance acco ding o he deg ee o explici pe sonal
in e ac ion in GVCS. In case o adi ional ma ke s, pe sonal in e ac ion be ween selle s
and buye s is minimal, and swi ching cos s o new pa ne s a e o bo h pa ies low. In
modula go e nance, supplie s deli e asks o a cos ume ’s speci ica ion, bu he supplie
has he compe ence o ake ull esponsibili y o deli e he ask. In ela ional go e nance,
he ask is cha ac e ised by high speci ici y and needs close in e ac ion be ween supplie
and demande . In cap i e go e nance, he lead i m o a la ge deg ee moni o s and con ols
he p oduc ion o he ypically simple ask p oduced ab oad and he e a e high swi ch-
ing cos s o supplie s. Finally, hie a chical go e nance exis s in he case o subsidia ies o
MNCs. F om ma ke s o cap i e and inally FDI, he deg ee o powe asymme y be ween
he lead i m and he uni p oducing he ou sou ced ask inc eases.
Besides FDI ypical in GVCs wi h supplie s in he Global Sou h a e cap i e s uc-
u es. Appa el and oo wea a e a ypical example whe e la ge ashion companies ake
on design and hen subcon ac speci ied asks. In he au omo i e indus y be ween lead
i m and i s - ie supplie s, he so-called o iginal equipmen manu ac u e s (OEMs),
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ypically ela ional go e nance exis s whe eas OEMs a e MNCs as well. Fi s - ie o
hi d- ie supplie s wi h modula o ela ional go e nance ou sou ce asks unde cap i e
s uc u es.
Asymme ic powe ela ionships a e ela ed o monopsonis ic s uc u es. This means
ha lead i ms ha e an in luence on he p ice o hei supplie s’ p oduc s, as he la e a e
dependen on one o a ew buye s. Classical examples a e supplie s in he clo hing indus-
y, whe e he e is ie ce compe i ion be ween supplie s in Vie nam, Cambodia, Tü kiye,
Bangladesh, E hiopia and o he coun ies o sell asks o MNCs. Economic modelling
gi es a clea pic u e wha happens in case o monopsonies o oligopsonies. P ices and p o -
i s o supplie s a e educed o a minimum. This in u n inc eases he p essu e on supplie s
o push wages as low as possible, wo sen wo king condi ions o ail o ul il ecological o
sa e y equi emen s (Milbe g and Winkle 2013).
4.3 Upg ading in GVCs
Economic upg ading is measu ed in e ms o highe p oduc i i y and eal income le els
o a coun y. Hopes a e ha FDI become a majo channel o ans e echnologies and
capabili ies o employees and managemen . FDI is used by lead i m when no echnically
and o ganisa ionally quali ied supplie s exis , o knowledge should no be ans e ed o
o he companies. O he wise, subcon ac ing is mo e ad an ageous o lead i ms as hey
can shi much o he bu den o ola ile demand o supplie s.
John Humph ey and Hube Schmi z (2000) dis inguish be ween (a) p oduc upg ad-
ing, ha ing a high quali y o he ask aken o e ; (b) p ocess upg ading, p oduce he
ask in an e icien way wi h pe manen high quali y; (c) unc ional upg ading, ake o e
highe alue c ea ing ac i i ies in GVCs like design o esea ch; and (d) in e -sec o al
upg ading, mo e o ela ed indus ies o use knowledge o en e new indus ies. The e can
be no doub , no only in case o FDI bu also in case o subcon ac ing, ha lead i ms
ha e an in e es in suppo ing p oduc and p ocess upg ading by ans e ing echnology
and aining o subsidia ies and e en subcon ac o s. Bu he e also can be no doub , ha
lead i ms ha e no in e es o ans e key knowledge and highe alue-adding unc ions
o subsidia ies o subcon ac o s. ‘P oduce s in de eloping coun ies a e mo e likely o
ope a e in chains cha ac e ised by quasi-hie a chy. (…) Ha ing made he in es men , i
is in hei in e es o main ain he ela ionship and asymme y’ (Humph ey and Schmi z
2000: 30; Schmi z 2004).
To ake o e simple asks in GVCs is a s a egy o de elopmen in a coun y o s a
indus ialisa ion in a speci ic sec o o imp o e a low le el o indus ialisa ion. Bu i
should be clea ha he ma ke mechanism also in case o FDI keeps he coun y a a le el
o simple and low- alue-adding p oduc ions. No unc ional upg ading can be expec ed
and no de elopmen o na ional i ms wi h he capabili y o become na ional champions.
In addi ion, he e is he dange ha o eign companies and he in oduc ion o ee ade
unde mine he exis ence o p omising na ional companies ha a e no ye able o com-
pe e wi h o eign companies. Dani Rod ik (2018: 14) co ec ly summa ises he e ec s o
GVCs o ca ching up: ‘New capabili ies and p oduc i e employmen emain limi ed o a
iny sli e o globally in eg a ed i ms’ (Rod ik 2018: 14).
Social upg ading includes a highe eal income le el, including highe eal wages. In so
a , social upg ading depends on economic upg ading. Bu social upg ading includes many
social dimensions such as be e wo king condi ions, ela i ely high minimum wages, el-
a i e equal income dis ibu ion, educ ion o po e y, ac i e ade unions and wage ba -
gaining o educ ion o he in o mal sec o . Economic upg ading does no au oma ically
lead o social upg ading. Resea ch has shown ha he ex en economic upg ading leads
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