Week 3 - GCN and Globalization

https://fee.org/articles/the-losers-of-globalization-didnt-lose-from-globalization/

Annika R. Uyenco
ASA 141
Week 3
Reflection on "Global Commodity Networks..."


This article discusses the dynamic shifts in the global economy, specifically within the leather-footwear industry for the past several decades. A global commodity network (GCN) is a linkage system of worldwide labor, production, and planning with a finished commodity being the end goal.

In the mid-1970s, The United States experienced a heightened obsession with different types of shoes, especially rubber and leather shoes. At the same time, American footwear manufacturing was in a steady and fast decline with most shoes in the American market now imported. Over the years, with online shopping made more convenient and easier and international cheap labor leading to dramatic low prices, American manufacturing has been struggling to remain relevant on the market.

Much of United States' leather footwear comes from Brazil and the leather produced into those shoes is from Argentina. An ongoing problem is the disconnect between the Argentine tanners and Argentine shoe producers. Shoe producers are upset that the Argentine tanners sell the leather for a lot cheaper to other countries such as Brazil. Tanner say the footwear industry in Argentina can not compete on a global market but producers explain that it is not possible if the tanners do not give them a chance. However, the tanners argue that the domestic shoe production is not as strong and the payments are more stable if they sell internationally. With Brazil having a strong leather-footwear production and the U.S. being its top buyer-not to mention the geographical location and shared cultural background-, Argentine tanners prefer to do business outside of their country.

When defining GCN, it is hard to separate it from the term "globalization." This term, from many different perspectives can be either negative or positive. From the Argentine tanners' point of view, the GCN is positive for their business as international selling is their main method of profit. But in the perspective of Argentine shoe producers, the GCN is hurting their business. The GCN can be helpful in many ways, especially when it comes to expanding the world economy and improving world trade. But it can be hurtful to some countries who feel it is an unfair advantage for countries who are more developed and financially stable. In countries where labor is so cheap, sometimes workers there are overworked and not given the right amount of pay or compensation.



Question: Do you think globalization is helpful or harmful in the end?