Transformation in the world economy Essay Example

(C.V.) and Spins, on economic and social development. Before Spins gained popularity, C.V. was the initial framework used to analyze global economies' various dynamics. With multinational companies outsourcing their production to subcontractors, global production in developing countries transformed from import-oriented to export-oriented industrialization. Consequently, C.V. analyzed the changing structures of business transactions, productions, and employment forms in different segments of the production chain. Additionally, a case study of the garment industry is presented in this essay to provide a comprehensive analysis of how the GAP framework functioned concerning development. It also explores the positive and negative impacts of analytical frameworks on development and examines to what extent these frameworks have revealed their impact.The notable classification of commodity chains was distinguished into two categories: producer driven and buyer driven chains (Grief, 1994). The process of production in producer driven chains was managed by multinational corporations, which focused on capital and technology intensive industries like automobile and electronic manufacturing. On the contrary, labor intensive industries such as large retailers or global apparel brands were engaged by multinational corporations from developed countries in buyer driven chains. These multinational companies do not possess their own factories, but they encourage the suppliers in their supply chains to meet the quality standards, delivery schedules, and set prices (Dolan and Humphrey, 2004). Furthermore, the comprehensive development of Global Value Chains comprises various sectors like logistics, tourism, and finance on a worldwide scale together with the industrialization of manufacturing and agricultural sectors (Grief, 2005). With the increasing complexity of global business transactions such as trade and production processes, the analysis of Comparative Advantage has played a significant role in creating and differentiating values

in an integrated process of production, distribution, and retail (Grief, 2005). Moreover, the studies on Global Value Chains have mainly focused on the institutional and social interests of integrated operations of multinational companies (Henderson et al., 2002).In addition to hats, GAP analysis now places more importance on the relationships between multinational companies and their contracted suppliers, and other actors that shape the production network, such as international trade unions and non-governmental organizations (Nags), according to Hess and Young (2006). Figure 1 illustrates these major actors in the global economy, which create the "Spins" of the world economy.
Furthermore, GAP analysis reveals the power balances between all actors involved in production, as well as their social and institutional connections (Baritones et al., 2011). Figure 1, taken from Dickens (2011) shows the major actor-centered networks in the global economy. However, there are limitations in analyzing labor within the framework of Spins, especially in academic studies (Baritones et al., 2011). Earlier literature from C. V. and GAP approach focused primarily on supply-side factors of production and categorized labor as an endogenous factor. Common case studies include examining employment conditions, workers' rights, and protection for laborers based on skill or sex (Baritones et al., 2011).In order to consider the extent to which Spins participation supports the social upgrading of laborers, it is important to view laborers as socially embedded actors with capabilities and entitlements. These rights are protected by domestic and global legislation, and paid laborers are particularly impacted by them. Participation in Spins reflects both positively and negatively on these rights, influenced by formal and informal social protection networks and policies. While Spins views laborers as participants in the

commercial dimension of production, they are also social actors who can shape and upgrade these processes in a globalized world. The GAP approach provides insight into the complex and worldwide nature of production networks. Social/economic upgrading refers to the process of improving labor standards and practices to create better opportunities for workers.According to Grief (2005), upgrading involves adding value to activities in order to improve productivity, technology, and profitability. The purpose of upgrading is often driven by participation in Spins. Previous research by Grief (1999) focused on upgrading for the industrialization process in labor-intensive manufacturing. Milling and Hinkler (2010) classify economic upgrading into four categories, with each having different segments of jobs and skills involved.

Product upgrading aims to make production processes more efficient by substituting capital for labor, resulting in higher productivity through automation. This ultimately reduces skilled and unskilled work. On the other hand, product upgrading introduces more advanced product types that require more skilled jobs to make an item with improved features.

Functional upgrading involves companies changing their mix of activities to higher value-added tasks. For example, in the garment industry, finishing, packaging, logistics, and transport can be done through vertical integration to add new capabilities or through specialization, which substitutes one set of activities for another.The process of economic upgrading involves acquiring new skills for the workforce to expand a company's capabilities. This may include chain upgrading, such as adopting more advanced technology in production, which can lead to entering new industries and utilizing different marketing channels and manufacturing technologies. Economic upgrading also includes the development of both capital and labor perspectives, with the former referring to the employment of advanced machinery

and technology and the latter focusing on skill development and productivity. However, this framework goes beyond labor-intensive manufacturing to encompass other related actors and is not solely focused on economic-upgrading transformation. In contrast, social upgrading involves improving labor rights and entitlements to enhance working conditions. This was defined by Seen in 1999.The concept of social upgrading serves to increase accessibility for laborers in obtaining better jobs while also providing better working conditions and protections through entitlement. The Decent Work Agenda, created by Olio, encompasses the fundamental concepts of social upgrading which include employment, standards and rights to work, social protection and social dialogue. The agenda encourages work conducted in an environment of freedom, equity, security and human dignity with proper payment and protection of labor rights. However, this package is difficult for economists to encompass in their theories as their measurements of social upgrading are defined by labor productivity and skills. Social upgrading can be classified by two measurable perspectives according to Baritones and Smith. These are measurable standards that classify laborers based on regular or irregular employment, wage level, social protection, working hours, sex data and unionization rates. These measurements can also be considered a result of collective bargaining which is a part of enable rights.Understanding the difficulties of shaping labor's social upgrading is crucial when considering the important factor of social upgrading for labor. This is because collective bargaining, which is an integral part of labor's social upgrading, is typically difficult to measure. The garment industry is often used as a case study to demonstrate the changes in global production patterns in developing countries. Garment Spins, which are buyer-driven production chains, provide labor-intensive

products using multinational companies' strategies. Figure 2 depicts the network linkage between raw material suppliers, manufacturers, subcontractors, headquarters, and textile industry in garment Spins. When analyzing labor's social upgrading in Spins, other social actors such as international buyers, social partners, government, and civil society should also be considered. The garment industry interacts with various social organization types such as international buyers and subcontracted suppliers in developing countries. Figure 3 illustrates the manufacturing process from start to finish. Source: Grief (1994) Garment industry especially in developing countries interacts with many types of social organization such as international buyers and subcontracted suppliers.The development and design of a piece of clothing occurs at the first level. Afterward, a sample is created, and suppliers are sent this sample to obtain the necessary raw materials. Once the fabric is received, supplier factories begin cutting it into the specific shape designed by lead companies, then pass it along to female workers who sew the sections together with their trained skills. Brand logos and price tags are affixed at this stage, and techniques such as patchwork and applications are employed for elaborate garments. Multi-skilled workers are later hired to oversee quality control and finish up production. The packaging phase mainly consists of low-skilled or younger workers without any inventory. For latest fashion brand GAP, a larger number of part-time or seasonal employees are hired during production. In order to avoid excess inventory, suppliers always consider their product's demand.The irregular labor related to logistics and packaging cannot work consistently or handle the pressure of their monthly wages as their workload depends on the demand and necessity for specialized products. Figure 3 presents the

segments of activities in the garment industry. Overall, the GAP framework exhibits global economic development and economic upgrading in this essay. It reveals that the upgrading process successfully prevails in various sectors of production networks, that include productivity and efficiency upgrading. Additionally, a benefit of utilizing GAP remarks for the garment industry is the interconnectedness of each tier through different geographic scales and territorial boundaries. Furthermore, it connects between companies and integrates relationships between nations and local economies. As an example, in the garment industry, the major production network is between developing countries as suppliers and developed countries as retailers because the product buyer and supplier are from separate groups.The GAP framework has the ability to differentiate the implications for economic development in each part of the garment industry, providing insight into the location-specific advantages, such as low-cost labour and geographical aspects. Rosin's (2011) case study reveals the structural characteristics of garment factories with two categories of workers, regular and irregular. Regular workers are senior and experienced, guaranteeing high skills with good quality, and are employed on permanent contracts at wages above the minimum with insurance support. Irregular workers are employed in unskilled segments of the production chain, such as packaging and loading products to logistics, which require sensitivity to time. While this analysis of employment pattern is a positive element of economic upgrading, there are negative aspects in terms of social upgrading in the garment industry in Morocco.The subcontracted factories where most of the labors work for major brand-name retailers in the garment industry are often hidden, making the young women and internal migrants who work there invisible and vulnerable. Discrimination and lack of

proper working contracts and social protection leave them earning below the minimum wage. Differences in employment security levels create gaps between workers in the industry, affecting their ability to join trade unions and international organizations within the GAP framework. Profit-making for leading firms comes at the cost of poor working conditions, low pay, and insecure hours for the labor force. Over the past few decades, there have been serious working condition issues that need to be addressed.According to Matter (2004), subcontracted factories with NIKKEI employ workers for "invisible" labor below the minimum wage and with poor working conditions. Meanwhile, Hale and Wills (2005) note that there is a lack of accessibility when it comes to organizing homeless workers at these factories and reshaping the structure of the industry on a global scale. Labor contracting can also lead to irregular and vulnerable workers in the garment industry as contractors move groups of workers based on demand and season. Despite these challenges, labor organizations and networks have emerged to resist exploitation and improve the social standing of workers in developing countries. Women Working Worldwide (WWW), an organization established in the UK, is a prime example of this effort, especially for female garment workers.

The primary goal of the WWW is to empower female laborers and address the injustices of irregular labor in the garment industry (Hale and Will, 2005). Through this organization, laborers can work together on issues of mutual concern on a global scale. The global network now has ten organizations and each local organization has established research projects to address the most pressing labor issues, from Thiensville to Visible (Hale and Will, 2005). These organizations

play a crucial part in social upgrading, which is an essential aspect of development in the globalized world. The emergence of such organizations reveals the negative concerns of the production process not only from an economic perspective but also from a social standpoint. The garment industry used to view laborers as insecure, low-paid, and irregular workers. However, these organizations are transforming the conceptual framework from Spins by playing a vital role in social upgrading.

In summary, this essay demonstrates the transformation of conceptual frameworks from Gives to Spins.

The C.V. framework was primarily used to analyze supply-side actors and could classify the world's manufacturing process with labor as an endogenous factor. The GAP framework, on the other hand, extended its analysis to include other social actors and focused on various linkages among the globalized world to support social upgrading of labors. The perspective presented regards labors as socially embedded actors with capabilities and entitlements. The case study of the garment industry by the GAP framework revealed the interconnectedness of each tier across geographic scales and territorial boundaries and showed that the spins of the industry are integrated not only between companies but also with nations and local economies. Furthermore, the GAP framework emphasized the significance of development from both economic and social perspectives. It also provided examples of two types of global labor - regular and irregular- in the garment industry, which encourage new aspects of global economy.The aforementioned works do not possess sufficient accessibility to create awareness among the public. Therefore, initiatives like the World Wide Web (WWW) can be crucial in highlighting issues related to the global manufacturing process.