GLS 430 The Global Economy
Professor Bowlby
January 23, 2007
Course Integration Paper
How Third World Cities Embody the Most Salient Features of the Modern Global Economy
Third world cities embody the most salient features of the modern global economy due to their historical ties with colonialism, migration from rural to urban areas due to industrialization, an over dependence on the global market, and their relationship with core nations in general. The shift in population from rural to urban areas in the periphery has been overwhelming, largely due to a loss of agricultural work in the rural areas. More and more people have thus migrated to cities in the hope of obtaining wage labor. In Unit 1, Chapter 19 in particular, Porter and Sheppard outline how "industrialization in the periphery is closely related to the broader situation of countries within the global system, and to be successful, it must both take advantage of and transform international trade flows" (Porter & Sheppard, p. 425). Because they rely so heavily on others in order to achieve economic success, governments in the periphery often "sell out" workers for a stake in the global economy, creating an atmosphere of poverty and overcrowding in their cities.
First, the most prominent features of the modern global economy are embodied by third world cities due to the fact that have been conditioned by European colonialism (p. 437). This historical influence has left them dependent and disadvantaged economically to this day. During colonialism, third world cities were
| centers of religious and military power, and this power permitted them to accumulate wealth on the basis of agricultural labor…cities developed not only as centers for local control and accumulation, but increasingly as nodes in a chain of long-distance trading networks, connecting Europe with China by way of central Asia, and with south and east Asia by way of the Middle East. Early European capitalism was thus associated with rapid urban growth. (p. 427) |
This history has thus thrown third world cities into the global arena regardless of whether or not they were equipped to deal with the local issues accompanying it.
Export processing zones are being created in third world cities in which the state overlooks the exploitation of workers in order to enter into the global market. This, in turn, creates regional inequalities. These locations are suitable for mass production due to a compliant workforce and the acceptance of low wages. Yet, "the ability to challenge international inequalities in economic development may bring with it reinforced regional inequalities within nations" (p. 425). Thus, export processing zones are tolerated by their governments at the expense of their own work force. As third world nations attempt to reduce inequalities in living standards between themselves and first world nations, they have often left the local work force disenfranchised. When we compared the site of Central American Business Consultants for Honduran Export Processing Zones to the pages for sweat gear, we could see the problems that arise as third world countries make an attempt to enter the global market. The overall impression given by the website of Central American Business Consultants for Honduran Export Processing Zones was one of ease and simplicity for the entrepreneur, taking little into account for the Honduran worker. On the other hand, the pages for sweat gear uses ironic humor in describing the plight of the worker. This plight included, but was not limited to, 18 hour overtime shifts without extra pay, going to the bathroom only twice a day, and having to work when fatally ill (Web Reading).
Porter and Sheppard discuss the policies of ISI and EOI. ISI (import-substitution industrialization) and EOI (export-oriented industrialization) and in the class lecture "Raymond Vernon's "product cycle theory" ("International investment and international trade in the product cycle" Quarterly Journal of Economics, 1966: 190-207) states that innovative technology is applied to manufacture a new product - eventually, this innovative technology is exported for sale and newly located innovative technology will then produce goods for sale in the nation where the innovation originated." Unfortunately, this has not proved successful due to monopolization of research and development by the core. "Firms located in the core tend to gain an edge in the high technology of the time and reap huge profits through monopoly control of this new product (also known as "technological rent")" (Unit 3 Lecture 1). This, in turn, creates a vicious cycle of lower wages, longer hours, and a greater exploitation of workers in general. Non-core governments then set up joint risks with core-based transnational corporations (TNCs).
| Joint-venture industrialization is normally too capital-intensive to help countries whose urban centers need more labor-intensive industries. As a result, the mass migration within the 3rd world from rural to urban centers has resulted in tertiarization. Newly arrived rural migrants take or make service industry occupations in the marginal, or shadow economy and become personal servants, or self employed workers: vendors, prostitutes, drug dealers, rag-pickers, garbage diggers, etc.. Taiwan and South Korea did not follow this "developmental" pattern. (Unit 3, Lecture 1) |
Because third world cities tend to be export oriented and foreign controlled, "it serves the priorities of foreign markets and corporations more than the priorities and needs of the local populace" (Unit 1 Module 4 Lecture). As a result, workers are thrown into the world labor market as dependents and the countries become industrial dependents. In this sense, third world cities are more affected by what goes on in the global market than their first world city counterparts. It also means that as the population increases in third world cities as people migrate there to find work, local planning has to try and catch up. These cities face over urbanization, minimal government spending on decreasing the gap between rich and poor and the disconnection between cities and the rest of the country, and a lack of facilities to accommodate the growing populations and economy.
The predicament third world cities find themselves in is reflective of issues third world nations face as they industrialize. Politically, many of these nations were drawn around colonial rule, exploited and used for core gain. "Colonialism was Europe's 19th-century reply to the abolition of the institution of slavery. Colonization is to a society as slavery is to an individual" (p. 327). The legacy of colonialism involves boundaries and nations, infrastructure, economic dependencies, political forms, and a remaining psychological effect on peoples and nations. As third world nations have moved from agricultural to non-agricultural activities, those who migrate to cities experience exploitation and are finding the conditions deplorable. While first world cities enjoy a connection to rural areas through urban sprawl and are centers for culture and education, many third world cities are lacking in this area. Instead, they are finding equal distribution of wealth and justice is very limited, if not absent altogether. As a result, labor is being seen as the only workable, cheap, abundant resource.
One example can be seen in the Matamoros web pages, persuading manufacturing firms to do business in Matamoros. They stress the ease and simplicity of it all. In order to sell this message, the web pages brag about their "talented workforce", prime location, and "low turnover rates". They also confirm NAFTA has had a significant positive effect on bringing new types of production to the area. The web pages emphasize successful workforces, unions, and training. They address the concerns of transnational corporations by boasting a positive quality of life, prime industrial space, and under "a Wholly-Owned Maquiladora", "foreign investors own a 100% equity stake in a maquiladora. Wholly-owned maquiladoras have parent companies abroad, usually in the U.S., that retain direct control of patents, technology and day-to-day operations" (Web Reading).
On the flip side, the Mexican maquiladora workers' struggle for better pay and conditions is sad to read and reminiscent of the pages for sweat gear. The story of Maria Ibarra is one in which she is in a constant struggle to earn a decent life for herself and her two sons but is never able to achieve that goal. This is the other side of the coin. Her effort to simply network for transportation to and from work was thwarted by her supervisors because workers were forbidden to speak to one another. This clip of what life is like in a border town is quite different from the picture painted by the Matamoros web pages. Porter & Sheppard relate issues concerning foreign branch plants in their summation:
| Some new FDI investment is better for the host country than no investment. If the gains accrue disproportionately to home countries, however, or to selected host countries that are already advantaged within the third world, then FDI can widen the economic inequalities within and between third world nations, and between these and the rest of the world. (492) |
In summation, third world cities embody the most salient features of the modern global economy because of their initial ties to colonialism, the migration from rural to urban areas due to industrialization, their dependence on the global market in hopes of domestic economic stability, and their relationship with core nations. The world has become reliant on the services third world cities provide, causing them to be an invaluable feature of the modern global economy. People around the globe have become accustomed to a certain standard of living, which wouldn't be possible without the services third world cities provide at such a cheap cost. In addition, there will also be those who wish to maintain their current economic status and in order to do so, will not attempt to help in the advancement of the world's poor. This lack of encouragement helps keeps third world cities and their inhabitants in a constant struggle for basic needs. Fortunately, as discussed in Unit 1 Module 4, the Grameen Bank may serve as an example of how poor people around the globe can earn credit and build better lives for themselves and their families. Citizen participation is another avenue by which those living in Bombay found to alleviate such problems as water access and trash disposal, and can serve as a model for other like minded citizens struggling to overcome poverty. Overall, third-world cities embody the most salient features of the modern global economy due to the relationship between core and periphery. While those in the periphery are dependent on those in the core, the reverse may be the real problem. The rest of the world is overly-dependent on the services provided by those in the periphery, creating an atmosphere in which change is unlikely.
Works Cited
Porter, Philip W. & Sheppard, Eric S. A World of Difference: Society, Nature, Development. The Guilford Press, 1998.
GLS 430 Unit 1 Web Readings and Lectures