Globalization, regional development and local response The impact of economic restructuring in...

8/17/2019 Globalization, regional development and local response The impact of economic restructuring in Coahuila, Mexico

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Globalization, regional development and local response

The impact of economic restructuring in Coahuila, Mexico


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Latin America Research Series

Backlist on the last pages of the book

The publication of this book was financially sponsored by the Urban and Regional reseacentre Utrecht (URU)

ISBN 90 3610 031 3NUR 780

© Leendert de Bell, 2005

Cover photo, by courtesy of the photographer: Jan Kuijt. First published in L. Gutiérrez (e(1999),Signos para la Memoria. Coahuila: devenir industrial . Saltillo: Centro de EstudiosSociales y Humanísticos.

Cover design: Ingrid Bouws, ThTh, Amsterdam.

Figures and layout: Rien Rabbers and Margot Stoete, GeoMedia (Faculty of GeosciencUtrecht University).

All rights reserved. Save exceptions stated by the law, no part of this publication may be reduced, stored in a retrieval system of any nature, or transmitted in any form or by any meelectronic, mechanical, photocopying, recording or otherwise, included a complete or partranscription, without the prior written permission of the publishers, application for whishould be addressed to the publishers:

Dutch University PressBloemgracht 82hs1015 TM Amsterdam

The Netherlands Tel.: + 31 (0) 20 625 54 29Fax: + 31 (0) 20 620 33 95E-mail: [email protected] www.dup.nl


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Globalization, regional development and local response The impact of economic restructuring in Coahuila, Mexico

Globalisering, regionale ontwikkeling en lokale responsDe invloed van economische hervormingen in Coahuila, Mexico

(met een samenvatting in het Nederlands)

Globalización, desarrollo regional y respuesta localEl impacto de la reestructuración económica en Coahuila, México

(con un resumen en Español)

Proefschrift

ter verkrijging van de graad van doctoraan de Universiteit Utrechtop gezag van de Rector Magnificus, Prof. Dr. W.H. Gispen,

ingevolge het besluit van het College voor Promotiesin het openbaar te verdedigen op

vrijdag9 december2005des middags te12.45uur

door

Leendert Andrew de Bell

geboren op6 juni1970te Susteren


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Promotor: Prof. Dr. M.L. Vellinga (Faculty of Geosciences, Utrecht University)

Co-promotor: Dr. W.G. Pansters (Faculty of Social Sciences, Utrecht University)


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Contents

List of boxes, figures and tables Acronyms Acknowledgements

Introduction(i) Background to the study

(ii) Relevance of the study (iii)Objective of the study (iv)Definition of the main concepts

GlobalizationRegional development Local response

(v) Methodology (vi)Structure of the study

Globalization, regional development and local response: A framework for analysisIntroduction1.1 The origins of globalization1.1.1 A new paradigm of development1.1.2 The spatial restructuring of production1.2 The globalization debate1.2.1 Globalization as an inevitable outcome1.2.2 Globalization as a dialectical process1. 3 Globalization and development1. 3.1 Global value chains and local clusters1.4 Globalization and inequality 1.4.1 Reconsidering the dominant development paradigm1. 5 Globalization and local responseConcluding remarks

Coahuila in perspective: Setting the stageIntroduction2.1 Defining the ‘region’

2.1.1 The state of Coahuila2.2. Defining the ‘local’2.2.1 Foreign trade and export manufacturing: The Border region2.2.2 Coal mining: The Carbonífera2.2. 3 Steel foundry: The Center region

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2.2.4 Marginal agriculture and mining: The Desert region2.2. 5 Agro-industry and export manufacturing: The Laguna2.2.6 Export manufacturing:The Southeast regionConcluding remarks

Coahuila in perspective: Introducing the principal actorsIntroduction

3.1 Government 3.1.1 Politics in post-revolutionary Mexico 3.1.2 Regional politics in Coahuila 3.1. 3 Local politics in Coahuila 3.2 The private sector 3.2.1 State-business relations in post-revolutionary Mexico 3.2.2 Coahuila’s large business groups 3.2. 3 Coahuila’s small and medium-sized business interestsConcluding remarks

The industrial origins of Coahuila Introduction4.1 Coahuila during the Porfiriato (1880-1910)4.1.1 Commercialization of agriculture: the ‘Cotton Kingdom’ in the Laguna4.1.2 Internationalization of mining: Coal in the Carbonífera4.2 Crises and conflicts. Political and economic transition (1910-1940)4.2.1 Coahuila during the Mexican Revolution4.2.2 Restoration and reform4. 3 Coahuila under the strategy of Import Substituting Industrialization

(1940-1970)4. 3.1 The arrival of the steel industry in MonclovaConclusion

Crisis and restructuring Introduction

5.1 Crises and conflicts (1970-1982) 5.1.1 Increasing state regulation in the public sector: AHMSA 5.1.2 Increasing deregulation in the private sector: The Grupo Industrial Saltillo 5.2 Early attempts of export manufacturing (1970-1982) 5.2.1 The local impact of the maquiladora industry 5.2.2 The local impact of other foreign direct investments (non-maquiladora) 5. 3 The local impact of Mexico’s debt-crisis (1982-1987 ) 5. 3.1 Downsizing the Mexican steel industry: AHMSA 5. 3.2 ‘Assembling for development’ 5.4 More structural reforms (1988-1993)

5.4.1 The privatization of AHMSA (1991) 5.4.2 The reform on mineral resources (1992): the devaluation of coal from theCarbonífera

5.4. 3 The agricultural reform of1992: the devaluation of cotton in the LagunaConclusion

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Coahuila under NAFTA Introduction6.1 Shifting to the fast lane: NAFTA6.1.1 Coahuila: ‘Land of opportunities’6.2 The realities of NAFTA6.2.1 Coahuila’s macroeconomic performance under NAFTA6. 3 Increasing sub-regional inequalities within Coahuila6. 3.1 The automobile industry 6. 3.2 The garment industry 6. 3. 3 Other economic sectorsConclusion

Coahuila in the st century Introduction7 .1 Coahuila: ‘A government with a human touch’7 .1.1 Indirect social and environmental consequences of economic growth7 .2. Ongoing export-oriented economic expansion (2000-2001)7 . 3. Cyclical economic shocks and increased international competition7 . 3.1 The effects of the crisis and new competition for Coahuila’s export-

industries7 .4. ‘Lessons’ from NAFTA7 .4.1 The ‘embeddedness’ of Coahuila’s export industry 7 . 5. Challenges ahead7 . 5.1 The automobile industry 7 . 5.2 The garment industry 7 . 5. 3 Other economic sectorsConclusion

ConclusionsIntroduction8.1 Summary of the main research findings8.1.1 Experiments with Export Processing Zones: Coahuila in the1970s8.1.2 Opening Mexico’s economy: Coahuila in the1980s8.1. 3 Free trade with the United States and Canada: Coahuila in the1990s8.2 Interpreting the differential impact of globalization on regional developmentFinal reflections

AppendicesI Governors of Coahuila (1917 -1999)

Presidents of Mexico (1917 -2000)II Population of Coahuila (1930-2000), per sub-regionIII Influential local entrepreneurs of Coahuila, per sub-region

IV Absolute numbers of new investments in Coahuila (1994-1999)Principal new manufacturing investments (1994-1999), per sub-regionV Absolute numbers of new investments in Coahuila (2000-2001)

Principal new manufacturing investments (2000-2003), per sub-region

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ReferencesSamenvatting ResumenCurriculum Vitae

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List of boxes, figures, and tables

Boxes4.1 New uses for Coahuilan coal:The Border region

5.1 Municipal elections in Monclova (1978) 5.2 Coahuila: ‘Solidarity state’

6.1 The export of livestock under NAFTA7 .1 Rogelio Montemayor vs. Enrique Martínez

Figures2.1 Map:The state of Coahuila2.2 Distribution population Coahuila over principal municipalities (2000)2. 3 Map: Coahuila’s sub-regions2.4 Demographic development of Coahuila per sub-region (1930-2000)2. 5 Employed population per economic sector:The Border region (2000)2.6 Employed population per economic sector: The Carbonífera (2000)2.7 Employed population per economic sector:The Center region (2000)2.8 Employed population per economic sector: The Desert region (2000)2.9 Employed population per economic sector:The Laguna (2000)2.10 Employed population per economic sector:The Southeast region (2000)

4.1 Principal input/output structure of cotton cultivation in the Laguna (1880-1910)4.2 Principal input/output structure of the exploitation of coal in the Carbonífera

(1880-1910)4. 3 Principal input/output structure of steel production in the Center region

(1940-1970)

5.1 Relationship maximum production capacity and total production AHMSA(1944-1982)

5.2 Evolution of the maquiladora industry in several Mexican border cities(1975-1982)

5. 3 Evolution of maquiladora employment in Coahuila’s border cities (1975-1982)

5.4 Relationship maximum production capacity and total production AHMSA(1982-1991) 5. 5 Evolution of employment at AHMSA (1982-1991) 5.6 Evolution hectares of cultivated cotton in the Laguna (1950-1992)

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6.1 Evolution of the maquiladora industry in Coahuila, per principal municipality (1993-2000)

6.2 Evolution of maquiladora employment in Coahuila, per principal municipality (1993-2000)

6. 3 Evolution of open unemployment rates in Coahuila’s principal urban areas(1993-2000)

6.4 Number of new investments in Coahuila, per sub-region, by economic sector(1994-1999)

6. 5 Total number of new investments, total volume of new investments andemployment generated by new investments, per sub-region of Coahuila(1994-1999)

6.6 Total number of new investments, total volume of new investments andemployment generated by new investments in the automobile industry,per sub-region of Coahuila (1994-1999)

6.7 Total number of new investments, total volume of new investments andemployment generated by new investments in the garment industry,per sub-region of Coahuila (1994-1999)

6.8 Total number of new investments, total volume of new investments andemployment generated by new investments in economic sectors other than theautomobile and the garment industry, per sub-region of Coahuila (1994-1999)

7 .1 Number of new investments in Coahuila, per sub-region, by economic sector(2000-2001)

7 .2 Total number of new investments, total volume of new investments andemployment generated by new investments, per sub-region of Coahuila(2000-2001)

7 . 3 Total number of new investments, total volume of new investments andemployment generated by new investments in the automobile industry,per sub-region of Coahuila (2000-2001)

7 .4 Total number of new investments, total volume of new investments andemployment generated by new investments in the garment industry,per sub-region of Coahuila (2000-2001)

7 . 5 Total number of new investments, total volume of new investments andemployment generated by new investments in economic sectors other than theautomobile and the garment industry, per sub-region of Coahuila (2000-2001)

7 .6 Evolution of open unemployment rates in Coahuila’s principal urban areas(2000-2004)

7 .7 Evolution of the maquiladora industry in Coahuila, per principal municipality (2000-2004)

7 .8 Evolution of maquiladora employment in Coahuila, per principal municipality (2000-2004)

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Tables1.1 Attributed differences between Fordist and post-Fordist modes of production

2.1 Evolution of Coahuila’s GDP per economic sector (1975-2000)

3.1 Victories opposition parties during municipal elections, Coahuila (1978-2002) 3.2 National economic conglomerates originating from Coahuila

4.1 Principal business interests of the Madero family (1880-1910)

5.1 The Mexican Steel Industry (1978) 5.2 Principal companies, products and number of workers at GIS (1975) 5. 3 Total number of maquiladoras located in Coahuila and employment generated

(1980and1990), per municipality, by industrial sector

6.1 Principal exporting companies Coahuila (1998)

7 .1 Decrease of employment in Coahuila’s sub-regions (2001)

I.1 Governors of Coahuila and their background since the Mexican Revolution(1917 -1999)

I.2 Presidents of Mexico and their background since the Mexican Revolution(1917 -2000)

II.1 Population of Coahuila, per sub-region (1930-2000)

III.1 Influential local entrepreneurs in the Border region, CoahuilaIII.2 Influential local entrepreneurs in the Carbonífera, CoahuilaIII. 3 Influential local entrepreneurs in the Center region, CoahuilaIII.4 Influential local entrepreneurs in the Laguna, CoahuilaIII. 5 Influential local entrepreneurs in the Southeast region, Coahuila

IV.1 Absolute number, volume, and employment generated by new investments inCoahuila (1994-1999), per sub-region, by economic sectorIV.2 Principal new manufacturing investments in the Border region, Coahuila(1994-1999)

IV. 3 Principal new manufacturing investments in the Carbonífera, Coahuila(1994-1999)

IV.4 Principal new manufacturing investments in the Center region, Coahuila(1994-1999)

IV. 5 Principal new manufacturing investments in the Laguna, Coahuila (1994-1999)IV.6 Principal new manufacturing investments in the Southeast region, Coahuila

(1994-1999)

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V.1 Absolute number, volume, and employment generated by new investments inCoahuila (2000-2001), per sub-region, by economic sector

V.2 Principal new manufacturing investments in the Border region, Coahuila(2000-2003)

V. 3 Principal new manufacturing investments in the Carbonífera, Coahuila(2000-2003)

V.4 Principal new manufacturing investments in the Center region, Coahuila(2000-2003)

V. 5 Principal new manufacturing investments in the Laguna, Coahuila (2000-2003)V.6 Principal new manufacturing investments in the Southeast region, Coahuila

(2000-2003)

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Acronyms

AHMSA Altos Hornos de México, S.A.ARMCO American Rolling Mill Company ASARCO American Smelting and Refining Company BIP Border Industrialization ProgramCANACINTRACámara Nacional de la Industria de Transformación

(National Chamber of Manufacturing Industries)

CIFUNSA Compañía Fundidora del Norte, S.A.CINSA Compañía Industrial del Norte, S.A.CCE Consejo Coordinador Empresarial

(Business Coordinating Council)CFE Comisión Federal de Electricidad

(Federal Electricity Commission)CMHN Consejo Mexicano de Hombres de Negocios

(Council of Mexican Businessmen)COECE Coordinadora de Organismos Empresariales de Comercio Exterior

(Coordinating Council of Foreign Trade Business Organizations)COPARMEX Confederación Patronal de la República Mexicana

(Mexican Entrepreneurial Confederation)CTM Confederación de Trabajadores de México

(Mexican Workers Confederation)IMF International Monetary FundINEGI Instituto Nacional de Estadística, Geografía e Informatica

(National Institute for Statistics, Geography and Informatics)ITESM Instituto Tecnológico de Estudios Superiores de Monterrey

(Monterrey Institute of Technology and Higher Studies)FAT Frente Auténtico de Trabajo(Authentic Workers Front)FOMEC Fomento Económico Laguna de Coahuila

(Private Body for the Economic Promotion of the Laguna)GATT General Agreement on Tariffs and TradeGAN Grupo Acerero del Norte GDP Gross Domestic ProductGIS Grupo Industrial SaltilloGM General Motors

MICARE Minería Carbonífera Río EscondidoMIMOSA Minerales Monclova, S.A.MFA Multi Fiber AgreementNAFINSA Nacional Financiera, S.A.

(National Development Bank)

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NAFTA North American Free Trade AgreementNIC Newly Industrialized Country NIDL New International Division of LaborPAN Partido de Acción Nacional

(National Action Party)PRD Partido de la Revolución Democrática

(Democratic Revolution Party)PRI Partido Revolucionario Institucional

(Institutional Revolutionary Party)PROFIT Promoción, Fomento Económico y Turístico del Norte de Coahuila

(Private Body for the Economic and Tourist Promotion of the Borderregion of Coahuila)

PRONASOL Programa Nacional de Solidaridad (National Solidarity Program)

SEFOMEC Secretaría de Fomento Económico(Secretary for Economic Promotion, Coahuila)SEPLADE Secretaría de Planeación y Desarrollo

(Secretary for Planning and Development, Coahuila)SICARTSA Siderúrgica Lázaro Cárdenas-Las Truchas, S.A.SIDERMEX Siderúrgica Mexicana

(Organizational body of Mexican state-owned steel foundries)SNTMMSRM Sindicato Nacional de Trabajadores Mineros, Metalúrgicos y Similares de la

República Mexicana (National Miners and Steel Workers Union)

SUTERM Sindicato Unico de Trabajadores de la República Mexicana (Mexican Electrical Workers Union)

TNC Transnational CorporationUNAM Universidad Nacional Autónoma de México

(National Autonomous University of Mexico) WTO World Trade Organization

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Acknowledgements

As I embarked on this research project, I soon found out that modern-day Coahcontinues to be widely considered a rather peripheral –and hence understudied– regMexico. Even while doing my interviews throughout the state, I have lost count oamount of times I had to answer the question:‘…but why Coahuila?’ I always interpreted thisas an encouragement, and as I became increasingly absorbed in the object of my stdeveloped a fascination for its rugged landscape of mountains and deserts, its ev

history, but most of all, its people. In the course of this research –which kept me busyfullsexenio– I am indebted to a great number of people. Although –unfortunately– thcannot all be mentioned here, I want to sincerely thank all those people who willcooperated by sharing their time and thoughts with me. The following persons desespecial mention.

First of all, my promotor, Menno Vellinga. Crossing disciplinary divides has been athan valuable experience for me. I have obtained many new insights and this eexperience strengthened my belief that History and Geography are in many ways hcomplementary (time-space). I hope some of this is transmitted in the following text. I Menno in particular for his confidence and constant encouragement over the years, andleast– for his meticulous editing of the final text. I would also like to express myrecognition for my co-promotor, Wil Pansters, whose profound knowledge and sanalytical skills constantly challenged me to ‘raise the bar’. Although up to his ears in all times, he always made time to discuss both small as well as larger problems I encouin the course of this project. Sharing a similar passion for Mexico in its many aspecnever managed to finish these meetings within the timeframe we scheduled beforehand

I want to thank Dr. Alejandro Dávila Flores, director of theCentro de Investigaciones Socioeconómicas(CISE) at the Autonomous University of Coahuila at Saltillo, for generouoffering the use of its facilities during my periods of fieldwork. I greatly valued the nuacademic discussions I had with researchers and students from CISE, and I am gratefthe unconditional assistance I received from its secretaries Conchis and Maru. I conmyself fortunate to be friends with Martha Rodríguez, directress of theCentro de Estudios Sociales y Humanísticos (CESHAC) in Saltillo, whose contagious enthusiasm, great knowledof local history, and an incredible social network have brought me into contact with people I would probably have never been able to contact on my own account. In this realso owe gratitude to Mario Dávila Flores, general director of theConsejo Estatal de Ciencia y Tecnología (COECYT) in Saltillo, who –during several breakfasts– filled me in on the leconomic and political dynamics of Coahuila and opened many doors for me.

Throughout the state of Coahuila, I received many warm welcomes and much supfrom a considerable number of people and institutions. I particularly thank the follopersons: Alfonso Vázquez, Carlos Valdés, Luis García Abusaid, and Jan Kuyt in Sa Willem Veltman, Ramón Williamson, and Edmundo Guzmán in Monclova, ReVidaurrázaga and Juan Parra in Piedras Negras, Oscar Izquierdo in Ciudad Acuña, A

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Bortoni and Patricia Ramos in Sabinas and Nueva Rosita, and finally, Armando Carlos aRicardo Murra in Torreón. I am also thankful for the cooperation I received from GeorgiRojas who herself conducted several studies within the state of Coahuila.

I would also like to express my sincere thanks to the following persons, who all hacontributed in one way or another –mostly after-hours– to making my stays in Mexico insuch a pleasant and memorable adventure. First of all, Rocío Canudas –my favoritechilanga – whosecasa truly becamemi casa , even to the point that I practically consider myself part of herloving family. I also greatly appreciate my friendship with Rosa Esther Beltrán, who sharesparticular interest for (local) politics and who continuously kept me updated on all major levents. I thank Maru Treviño for being such a pleasant companion, with whom I never gtired discussing the many different aspects of lo mexicano. A mention of appreciation also goesout to Cande Valdés, a dedicated historian who shares my interest for good food and fitequila. Gaby Román deserves special thanks for storing my mountainbike and other humpossessions during my absence. I would also like to mention Rosy and Jeni, for serving

best vegetariancomida corrida in Saltillo, which always formed a welcome pause during my –often rather hectic– daily routine. Finally, I want to express my gratitude to my dear friein Monterrey, Camilo Contreras and Lylia Palacios, for being who they are.

I want to express my appreciation for the colleagues at the Institute of DevelopmenStudies, in particular my fellowlatinoamericanistas , Otto Verkoren and Paul van Lindert, andour secretaries Anneke van der Loo and Paula van Duivenvoorde. Coming from a differacademic background, I have felt at home at IDSUU from the day I started. Neverthele without the support and pleasant distraction of my Ph.D. colleagues, this exercise wouhave been much more difficult. I therefore would like to thank both the ‘old generation’ GNijenhuis, Robine van Dooren, Floor Smakman, and Paul Burgers as well as our ‘successEdo Andriesse, Bram van Helvoirt and Marike Bontenbal. I would hereby also like include our visiting Mexican Ph.D. fellows Humberto Palomares, Blanca Vázquez, LisbeDomínguez and Julio Morales.

A special thanks goes out to Floor Smakman, Simone Remijnse, and Chris Humphrey ftheir valuable comments on earlier drafts of several of these chapters. I also owe gratitudMargot Stoete and Rien Rabbers at GeoMedia, for the beautiful layout of the text and figure

Finally, I would like to thank our close friends and family –for whom I have not alwabeen most sociable I’m afraid– for their understanding and support, and for helping us ounumerous ways over these years, in particular Bianca and Ed, Fiona and Roel, Carla aPaul, Martinique, Ilon and Mark, Anita and Jan, and of coursemi cuate Vik. A specialmention goes out to my late mother-in-law Mrs. I.H. Pors-Baumann –with herunconditional confidence in my abilities– who always had a safe refuge for Esther and children when I had to meet yet another deadline. Unfortunately she is no longer with ussee the final result. We were fortunate with the help of family Moret for taking care of muof our worries over the past year. I want to express my particular gratitude to Carol and Lboth for their mental as well as practical support, but perhaps most of all for lovingly puttup with children who never seem to choose the ‘easy way’ out.

Most importantly, however, I dedicate this book to those who mean the world to me

Esther, Lotje, Madelief and Hielke. I am consciously aware that living with me over the p years –and during periods of fieldwork without me– has not always been easy, and I sincehope I can somehow make it up to you all.

Wijk bij Duurstede, October 2005

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Introduction

(i) Background to the study

This study forms part of a long-term research program of the Institute for DevelopStudies at Utrecht University (IDSUU), concerning the dynamics of local and regdevelopment within a global context. In a world that has become increasingly interconover the past decades –economically, politically, socially, and culturally– new challen

posed to development, in theory as well as in practice. Many notions of classic develotheory –the dichotomy between the ‘First World’ and the ‘Third World’, the notioprogress, and the focus on the nation state as the main framework of analysis– havimportance in an increasingly globalized world (cf. Kalbet al., 2004; Robinson, 2002;Schuurman, 2000; Timmons and Hite, 2000). In answer to the impasse in developmenttheory that became apparent in the1980s, some postmodernist authors even argued to rejectthe concept of development altogether because of its highly ideological overtoneEscobar, 1995). Others, however, have stressed that the very essence of development stu–a normative concern with equality, inequality and social exclusion– has not lost vunder processes of globalization (cf. Bebbington, 2005: 25; Schuurman, 2000: 9).

Development has increasingly become interpreted in terms of increasing integrationthe world economy, and the ability to capitalize on processes of ‘globalization’ as a lregional and local economic growth. The registered outcomes of globalization processfar have indicated strongly differential impacts, both between and within nations, relocalities and social groups. Certain regions, industries or social groups undergo the effa growing economic and social interdependence more intensively than others. In ordunderstand why some regions perform better than others, detailed case studies are indiGlobalization should thereby not be viewed as a top-down and unidirectional procesinstead as a dialectical interaction between economic, political, social and cultural instior actors that operate across different geographical scale levels. This dialectical relationship between the ‘global’ and the ‘local’ has become a theme in the numerous research projects organized by IDSUU. The objective of tendeavors has been –through comparative analysis and the definition of empgeneralizations– to contribute to the general understanding of the workings of procesglobalization and the way these are mediated at the regional and local levels, also refeas the ‘global-local nexus’, or ‘glocalization’ (cf. Robertson, 1995; Vellinga, 1999a).

Traditionally, the northern border region of Mexico has been a major area of interethis type of research (cf. Palacios, 2004; Dooren, 2003; Vellinga, 2000; Verkoren, 1995). The

region represents a rather unique case where two fundamentally differently orgaeconomies border on each other. Mexico presents an example of phenomena that todabe witnessed in many cases where economies with sharply differing levels of developmlinked to each other. This way, the evolution of the Mexican case holds imporimplications for other nations, ‘…both as a prototype […] and as an ideal-type’ (Babb 2001:

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13). This study deals with the dramatic socioeconomic changes, resulting from Mexicongoing integration into the world economy. It focuses on its northern region whicaccumulated experiences with economic internationalization at an early stage, throuexperiments with Export Processing Zones along the Mexico-U.S. border in the1970s,followed by the integral opening of Mexico’s economy in second half of the1980s,culminating in the North American Free Trade Agreement (NAFTA) in the mid-1990s.

(ii) Relevance of the study

The main object of study concerns the dynamics of development in Coahuila, a state situain the northeast of Mexico, bordering Texas. In the context of this study, ‘region’ an‘regional’ refer to the political-administrative delimitation of the state of Coahuila. Fseveral reasons, Coahuila makes an interesting case with respect to the study of the worki

of the global-local nexus. Coahuila has become one of Mexico’s most successful exporiented manufacturing states, in particular since the start of NAFTA. During the pasdecade, a large number of domestic and foreign companies have made substantiinvestments in Coahuila, strongly contributing to export growth and increasing itcontribution to the Gross Domestic Product (GDP). However, questions must be raiseabout its ability to generate growth with equity.

Coahuila has a presence of a number of clearly distinct sub-regions, each of them havfollowed a different historical development path. Since globalization processes are alwmediated by specific local practices and histories, its outcomes will not occur in the same and at the same rate throughout the state. The process always and inevitably involv‘winners’ and ‘losers’, both among as within regions (cf. Dicken, 2003; Vellinga, 1999a;Gereffi, 1996). This study focuses in particular on the differential impact of processes ofglobalization between and within Coahuila’s sub-regions, industries and social groups. Manalyses of regional development in Mexico have focused on macro regions, stressing impact of an increasing North-South divide within the country (cf. Liverman and Crave1992; Bassols, 1990), whereas studies on intrastate differentials have remained limited.

This study differs from most other studies on the local impact of processes oglobalization in three important ways. First, it goes beyond a focus on the behavior of fir within networks –an approach that is most common in global value chains analysis andlocal cluster approaches– and studies developments in a wider local political and soccontext. This includes the role of local and regional governments, the role of the local privsector, the role of organized labor, and other stakeholders. Second, the study goes beyofocusing exclusively on success stories. Analyses of those sub-regions, localities, econsectors, and social groups that fail to link up with the world economy successfully, ofinsights that are just as valuable –if not more– in the study of workings of processes globalization.Third, the study is firmly historically embedded to stress the processual natof regional development. ‘Regions are historical constructs, projects arising from interacand negotiation between the various local actors’ (Vellinga, 1999b: 284). Certain place-

specific conditions are the result of local pathways of development, which can crecomparative advantages in comparison to other regions but can also lead to path dependen when regions become ‘… locked in by the very socioeconomic conditions that once mthese regions stand out against the rest’ (Grabher, 1993: 256).

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(iii) Objective of the study

Following the successful examples of East Asian economies, integration into world mbecame widely considered to be the surest recipe for realizing economic growthdevelopment with equity. In the1980s, neoclassically trained technocrat-politicians andmultilateral agencies such as the World Bank and the International Monetary Fund (IMdictated a radical shift in development strategy in most Latin American countries:import substituting industrialization toward export-oriented manufacturing. Econostructural adjustment programs prescribing liberalization, deregulation and privatization widely implemented, reducing the role of the state, while directing the economy towamarket. Increasing the international competitiveness of domestic enterprises and attrforeign direct investments became important objectives in (regional) development polic

The effects of this strategy on development are not without debate. Most policymand business gurus defend the role of foreign direct investments by indicating that

generate direct and indirect employment, contribute to a growth of manufactured ex while offering local small and medium-sized companies opportunities to become inteinto global production networks of lead firms, and at the same time upgrade worker Political opponents and academic critics on the other hand, have qualified this develostrategy as a ‘race to the bottom’. They argue that increased international competitioresulted in the breakdown of social welfare, while increasing social inequalities. In ways, the –often ideological– debate on whether foreign direct investments resu‘emancipation’ or ‘exploitation’ can be viewed as a continuation of the classic moderndependency debate.

The main objective of this study is to offer a more differentiated understanding oimpact of processes of globalization on regional development. It questions the idea rising tide will lift all boats’ (Dicken, 2003: 552). Imitating a successful development modeloffers by no means a guarantee for success, since it ignores the enormous variations band within countries and regions.The positions of nation states, regions, localities and groups in the global economy vary, and so does their ‘window of opportunity’ (Ve1999b: 286). By addressing the role of local actors and practices, this study aims at a bunderstanding of why and how these significant transformation processes in the domand international political economy have had such a differentiated local impact. This sguided by the following central research question:

What has been the impact of processes of globalization on the regional development of Coahuila’s different sub-regions, and what has been the role of specific local conditions and actors in its outcomes?

In order to answer this question, the following research questions –regarding the ‘ when, where, who, and how’– have to be attended first:

• Since when, and to what extent, have Coahuila’s different sub-regions bec

incorporated by processes of globalization?• How have these processes of globalization transformed the traditionally domeconomic activities in Coahuila’s different sub-regions?

• To what extent and in what way have local actors within Coahuila’s different sub-rmediated these processes of globalization?

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(iv) Definition of the main concepts

The following chapter will extensively review the academic debate concerning the three mconcepts of this study –globalization, regional development and local response– and thinterrelationship. This section will shortly indicate the way in which each concept has beemployed throughout this study.

Globalization Within economics and the social sciences, globalization has become the ‘buzzword’ of 1990s. Unfortunately, it has remained difficult to conceptualize with some degree oprecision. Different academic disciplines emphasize different concerns, and use differterminologies. Most commonly, globalization refers to those processes that have made world increasingly interconnected through important technological innovations in transpand communications, facilitating a spread of goods, services, information, capital, labor

knowledge across (international) boundaries worldwide. The roots of globalization are situated in a changing international political economy the 1970s. These changes were encouraged by a worldwide paradigm shift, stressing thimportance of an unhindered working of market forces. In addition, increased competition an international scale since the1970s has resulted in the decomposition of productionprocesses by lead firms in the advanced economies, and the geographical relocation of most labor-intensive parts of their production processes to low-wage, low-skill productfacilities in developing economies. Both phenomena are closely related and mutuareinforcing, and have strongly contributed to the dramatic transformations that have takplace throughout the world.

This study particularly emphasizes the economic dimension of globalization, manifesin the role of foreign direct investments and the domestic economic reforms since the1980sunder influence of ‘neoliberalism’ and the so-called ‘Washington Consensus’ (William1990).

Regional development Development theory has entered an impasse since the1980s from which it has not (yet)emerged. ‘Development’ has become a contested concept, and there is no agreement upthe way to conceptualize the impact of globalization within development studies (cSchuurman, 2000). Anthony Bebbington (2005) makes a helpful distinction between twomeanings of development, although they are not entirely separated. ‘Development as texpansion and extension of capitalist systems of production, exchange and regulation’‘development as organized interventions with explicit and implicit goals’ (Bebbington, 2005:17 ). Although these interpretations can be simultaneously applied to the global and the locthe tendency has been to treat ‘development as capitalist expansion’ more as a glophenomenon, while ‘development as intervention’ is often treated as a sub-nationphenomenon ( Ibidem: 18).

At the heart of every (regional) development strategy –development as intervention– l

the objective of economic growth and equality. However, in practice there exists a natutension between them, as a result of which most policies have traditionally been a trade-between the two (cf. Gore, 1984: 50- 51). Under the new paradigm that has come to dominategovernment policies in both advanced and developing economies in the1970s and1980s,policies were primarily directed at economic growth and macroeconomic balance. Regio

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inequality was expected to increase in the short run, after which economic growthbelieved to trickle down toward the lower strata. ‘Development’ was redefined in te‘successful participation in the world market’ (Robinson, 2002: 1056).

In this study, regional development is understood in terms of ‘intervention’, wfocusing on the concerns, strategies and dynamics of different actors and tparticipation in economic growth and reduction of disparities within the state of CoahObviously, this takes place within the wider context of ‘development’ –the ‘ebbs andof capitalist systems of production and the ways in which they affect places (Bebbi2005: 17 -18).

Local response The focus on the ‘global-local nexus’ and the notion of ‘development as intervention’the ‘global’ and the ‘local’ as deeply intertwined and actually functioning as two sidesame coin. This means that globalization should not be presented –as ventilated in po

views and by several business gurus– as a top-down, irreversible, all-determining formoves across the world, subordinating places to global capital and increasingly homog worldwide consumer demand. Instead, this study connects with the large body of litethat calls for a dialectical understanding of globalization processes (cf. Dicken, 2003;Vellinga, 1999a; Heldet al., 1999; Cox, 1997 ; Mittelman, 1996a; Hirst and Thompson, 1996;Ruigrok and Van Tulder, 1995).

Specific regional and local cultural, social, and political institutions and practices wonly influence how globalization processes are experienced, but will also influence theof those processes themselves. Changing international developments are conditioning than determining regional economic outcomes. Regions and localities are not parecipients of processes of globalization. Their outcomes are always mediated by soceconomically heterogeneous groups. ‘A considerable number of actors are involved [pursuing their particular interests within the context of the parameters set by internateconomic developments’ (Vellinga, 1999b: 289).

In this study, the main actors involved include sub-national governments, entreprencorporations, organized labor, and social or economic organizations representing stakeholders in Coahuila’s sub-regions.

(v) Methodology

The specific nature of this study required a methodology combining statistical, historicqualitative approaches. The statistical analysis mainly concerns the empirical impprocesses of globalization on the state of Coahuila. Most of the statistics on populdemography,maquiladora industrialization, employment, and related information, draw odata from the National Institute for Statistics, Geography and Informatics (INEGI). Mspecific statistics on investments in the state of Coahuila were obtained via officiadistributed by the state government in the form of –appendices to– the yearly Informes de

Gobierno(State of the State Address). Where needed, additional information was requefrom the state Secretary for Economic Promotion –or Planning and Development– inform of preliminary, unpublished documents. The data on the economic performanCoahuila were complemented with information from secondary sources, in particularproduced by theCentro de Investigaciones Socioeconómicas(CISE) at the Autonomous

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University of Coahuila, which published a number of valuable studies on various dimensof the economic transformation of Coahuila since the early1990s.1

This study’s longitudinal approach also required historical methods of research. Mohistorical dimensions of this study draw on a synthesis of the fairly large, and qualitativgood body of literature that deals with specific historical processes or with historicdevelopments in sub-regions within the state of Coahuila. Additional information ospecific developments of Coahuila’s more contemporary history were obtained in loarchives –the Instituto Estatal de Documentaciónin Ramos Arizpe and the Archivo Municipal in Saltillo. The holdings consisted mostly of back-issues of local and regional newspapand magazines since documentation on contemporary political administrations in Mexicousually not disclosed within a thirty to fifty-year period after the end of that administratio

In order to understand the wider social and political impact of the transformationresulting from the processes of globalization, this study included a wide array of nostandardized, open-ended interviews with key informants. This approach allowed to obta

information on the rationale and complex relationships among actors operating at the lolevel, which generally would have remained obscured when a standardized survey appro would have been used (cf. Schoenberger, 1991). The principal objective was to gatherinformation from high-level informants, who occupied or have occupied strategic positiduring specific processes within the realm of regional development, above all (former) puofficials, politicians, entrepreneurs, and leaders of labor organizations.

Many informants, in particular those in the private sector, initially shared a certaireluctance to be interviewed and were suspicious with regard to the objective of this studtook a special effort to gain their trust. Eventually, most of them agreed to cooperate. Bmeans of a ‘snowball’ method, the established trust with several high-level public officand general directors or presidents of companies opened doors to other relevant informaamong top-bureaucrats and entrepreneurs. In those cases where the contacts with top-levofficials or businessmen remained frustrated, informants at the medium-level within tsame institution or company were contacted. In addition to these interviews with keinformants, several interviews were conducted with ‘knowledgeable observers’ ( journalists, local academics).

A total of close to one hundred interviews were completed, during three periods ofieldwork.2 During the first period (October2000-March 2001) and the second period of fieldwork (November2001-February2002), most interviews were conducted with informantsin the Southeast region of Coahuila (Saltillo and Ramos Arizpe) and the Center region Coahuila (Monclova and Frontera). The third period of fieldwork (April2003-July2003)focused on the Laguna (Torreón), the Carbonífera (Sabinas, Nueva Rosita, and Múzquizand the Border region of Coahuila (Piedras Negras and Ciudad Acuña). Although the issuaddressed in the interviews were standard, each interview resulted in a unique interactdialogue. As the ‘snowball’ increased in size, information obtained from previous interv was crosschecked, and interpretations offered by previous informants were employedinvite comment of others.

(vi) Structure of the study

This study contains a total of eight chapters, which are structured as follows. Chapter1 willunpack the conceptual fuzziness surrounding the concept of globalization and addresses

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major ideological and analytical issues involved in the debates. Some of the most dissues concern the impact of globalization on the role of the nation state, and the ro‘place’ in general. The phenomenon of globalization has had a strong impact ondevelopment debate. The central question in this area of course remains wheglobalization will contribute to sustained, long-term development? Detailed, empstudies on the interaction between the global and the local are necessary to answer questions.

Chapter2 will describe the context within which the socioeconomic transformatisince the1970s have taken place on the national as well as on the regional level. It introdthe main physical and socioeconomic characteristics of the state of Coahuila. The domeconomic activity in this sizeable, but relatively sparsely populated state has traditbeen industry. Coahuila is commonly divided –on the basis of clear socioeconcharacteristics– into five sub-regions that historically have taken very different coueconomic development. The chapter will show how these different sub-regions relate t

other, and to conditions on other geographical scale levels of analysis.Chapter 3examines the principal actors involved in the process of economic restructuthat started in the mid-1970s. The nature of the (unique) relationship between thegovernment, labor and the private sector that had emerged in the aftermath of the MeRevolution has changed significantly over the past decades under influence of mreforms. Each geographical scale level thereby displays a different dynamic with resthese processes. This chapter addresses the main characteristics of the Mexican posystem and its complex and changing relationship with the private sector –at the natregional and local level– and introduces the main regional and local actors, whose srole will be examined in course of the following chapters.

Chapter4 goes back to the origins of Coahuila’s industrial development in the lnineteenth century, indicating the processual nature of regional development. EacCoahuila’s sub-regions experienced its own economic heyday at a specific historical m These were always the result of the synergy of strategies and interests of specific ac various geographical scale levels. Many of these activities, however, remained limitedspecific branch of industry or one commodity, and respective economic booms often to be strongly time-bound. By taking a long-term, evolutionary approach, the chaprovides valuable insights that contribute to an understanding of the differential effeprocesses of globalization in the various sub-regions and among the different social gro

Chapter 5 addresses the complex and multi-layered processes that have accompanMexico’s shift from a development paradigm emphasizing import substituindustrialization to one stressing export-oriented manufacturing. The analysis of Coahdifferent sub-regions clearly shows that this process did not happen everywhere at thetime and with the same intensity, and consequently, did not have the same outcomeincreasing disparity between different sub-regions began to crystallize during the ecorestructuring in the1980s. Why have some sub-regions, industries and social groupmanaged to become more integrated into the world economy than others?

Chapter6 deals with the impact NAFTA –one of the most a radical trade experiments

history– had and continues to have on the different sub-regions of Coahuila.negotiations on NAFTA were accompanied by a strong media offensive that was meassure the Mexican public of the positive effects of free trade on the standard of livingcitizens, leading to sustained growth with equity. The speed of the negotiations and theterms of the agreement, however, also raised widespread opposition. What has bee

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impact of NAFTA on Coahuila’s different sub-regions, and how have specific locconditions and actors influenced its outcomes?

Chapter7 contemplates on several important changes in the international politicaleconomy after the turn of the century that have affected the national and regional economof Mexico. The euphoria with respect to the development opportunities based on attractiforeign direct investments had already faded after several countries –above all in LaAmerica– suffered financial crises in the second half of the1990s. The export sector of Mexico, and of border states like Coahuila in particular, have been heavily affected by slowdown of consumer demand in the United States –its principal export market– and increased international competition –in particular from labor-intensive assembly industrieother countries of Latin America and East Asia. It raises questions about whether thselective export-boom of the1990s has simply been another short-term boost, or thatopportunities for a more sustained and equal development still persist?

In chapter8, finally, I will attempt to draw the main conclusions on why processes of

globalization have such a differential local impact. By retaking the main research findinseveral important social and political key variables can be established that explain thdifferent outcomes and which hold general value for further study of the global-local nexin particular concerning the question: Can globalization contribute to sustained, long-tergrowth with equity?

Notes1 The few studies that integrally address social, economic, political and cultural issues in the state

Coahuila usually form part of series on Mexico’s states, such as theBiblioteca de las entidades federativas (Beltrán, 2003), Breves historias de los Estados de la República Mexicana (Santoscoyet al.,2000), andHistorias regionales: Perfíl socioeconómico de México(Cruzet al., 2000). With a few notableexceptions of studies with a clear thematic focus (cf. Contreras, 2002; Pasztor, 2002; Salas, 2002;Rueda, 2001; Plana, 1996; Yáñez, 1994; Langston, 1980), most research on contemporary developments in Coahuila is carried out by local institutions and researchers, which unfortunatoften limits its distribution to a wider audience.

2 The average duration of each interview was45minutes to one hour. All but one of the interviews were conducted in Spanish, and most informants agreed to the use of a tape recorder. If not, not were taken by hand.

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Globalization, regional development and local response: A framework for analysis

Introduction

The 1990s witnessed a dramatic increase in ‘globalization speak’, indicating a bconsensus that the world had become a qualitatively different place in comparison wita few decades ago. Important technological innovations in transport and communicahave facilitated instantaneous transmissions of large amounts of information over

distances, conceptualized by David Harvey (1989) as a ‘compression of space and time’. The world has become increasingly interconnected, economically, politically, sociallyculturally.

‘Globalization’ has become a central concern to virtually all areas in economics asocial sciences. ‘Any intellectual engagement with social change in the twenty-first chas to address this concept seriously’ (Tayloret al., 2001: 1, as quoted in Yeung and Peck,2003: 11). Despite all scholarly activity, it has remained difficult to conceptualize. Diffdisciplines appear to develop different concerns, apply different levels of analysis anhorizons, and use different terminologies. ‘Globalization’ has increasingly beco‘theoretical umbrella’ or ‘container concept’, in which academic research and political have often become blurred (cf. Kalb, 2004; Vellinga, 1999a). As a result, there is no finishedtheory of globalization, as every attempt at conceptualization remains heavily contesanything, this debate proves that globalization is above all a complex and multi-laconcept, which needs to be ‘unpacked’ in order to be understood thoroughly (Dickenet al.,1997 ).

This chapter particularly emphasizes the economic dimension of globalizatioaddresses the relationship between the processes of globalization and regional develo–in particular in developing economies– while reviewing the major debates on the outof a new development paradigm, in particular at the local level.The concepts to be disin this chapter provide the theoretical framework that will serve the analyses of the impglobalization processes in a region in Northern Mexico.

The first section focuses on the origins of what today generally is being referred‘globalization’, addressing its economic and political foundations and the spatial outcothe reorganization of production. Section1.2 discusses the principal issues within the debateon globalization, in particular those concerning the role of the nation state and the impthe ‘local’ in general. Section1. 3 analyzes the relationship between globalization and regionadevelopment, while the fourth section addresses the increased inequalities that have refrom polarizing globalization processes. The final section of this chapter focuses on

object of this study: the local responses to processes of international economic restruct

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. The origins of globalization

Some authors have argued that globalization as such is nothing new, since the spread economic activities across national boundaries can be traced back to the mid-nineteencentury (cf. Hirst, 2000), or –according to the world systems approach– even to the originsof international trade in the seventeenth century (Wallerstein, 1980). However, present-day processes of globalization do not necessarily refer to a mere quantitative increase or extenof economic activities across national boundaries, which would perhaps best be captuunder the terminternationalization of economic activities (cf. Gereffi, 1999: 32, originalemphasis). They, above all, refer to important qualitative changes in the way economactivities increasingly are being organized globally (Dicken, 2003: 29). Many of thecharacteristics of contemporary processes generally referred to as ‘globalization’ have origins in a number of drastic and fundamental transformations in the world order that toplace in the early1970s.

In those years, the economic hegemony of the United States (thePax Americana ) thathad consolidated after World War II suffered a severe recess. Real wages and commodcosts had increased strongly in the late1960s, and inflation, labor militancy andunemployment had reached levels unknown since the Great Depression of1929. LeadingU.S. firms suffered the saturation of the domestic market, resulting in overproduction, whbeing increasingly challenged by international competition, in particular from Japanese fir The fourfold increase in the price of oil, enforced by the OPEC states in1973, had resulted inan energy crisis in the Western world, making clear that they had no longer access to unlimited supply of raw materials. U.S. post-war hegemony in the world economy wfurther put in question by the collapse of the Bretton Woods system of fixed exchange rain 1971,1 which had become increasingly unstable as a result of the increasing mobility capital. After the United States moved to a floating exchange rate, other countries followe

The origins of globalization are thus to be situated in a changing international politiceconomy that can be directly traced back to the above mentioned crisis in the1970s. Thissection first addresses the deregulatory forces that rapidly gained importance throughout world, followed by the profound spatial restructuring of production under the imperativeincreasing international competition.

1.1.1 A new paradigm of development

During the1970s, the classical market theories of Adam Smith and David Ricardo regainedpopularity in the United States and Europe under influence of Nobel Prize-winningeconomists Milton Friedman and Friedrich von Hayek. The political legitimacy aneconomic viability of the Keynesian welfare state had come under increasing pressure.active role of the state in the economy was put into question and was held primariresponsible for the economic downturn. Neoclassical economic theory emphasized timportance of unhindered workings of the market forces as promoter of developme(laissez-faire ). Free markets were said to allow the factors of production –labor and capitalto flow where their use would be most efficient, eventually leading to an equalization

factor returns and convergence (cf. Perrons, 2004: 56). Throughout the1970s and1980s, a wave of graduate students trained in the neoclassical tradition at U.S. universities abusiness schools became the main agents of economic change as they increasingly occukey positions in government, in advanced as well as in developing economies, amultilateral institutions such as the World Bank and the IMF.2

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In the1980s, these institutions came to play an increasingly important role in the worldwspread of an ideology that favored unfettered market forces, starting out in Latin AmAfter Mexico declared a moratorium on the payments of its external debt in1982, other largeeconomies (Argentina, Brazil, and Venezuela) followed with debt-crises when accexternal finance was suddenly curtailed (cf. Gwynne, 2003). The new class of U.S. trained‘technocrats’ that had gained power throughout Latin America turned to the World Band IMF for help and advice. From the outset, the Reagan administration recognizeddebt-crisis of Mexico and the other countries as an opportunity to force policy refthroughout Latin America, thereby inaugurating a new era of policy-based loans (cf.2001: 173). Throughout the1980s, the free market ideology with its emphasis on governmenderegulation and sound financial management spread rapidly throughout Latin Americthe rest of the world. Concerns about social and political stability further fed the bconsensus favoring market reforms that emerged in the1980s (Korzeniewicz and Smith,2000: 20).

By contracting loans from the World Bank and IMF, Latin American governmcommitted themselves to stabilization and structural adjustment programs, whichpractice– above all focused on the reduction of the state intervention in production anprovision of social services. The persistent poverty and debt in Latin Americainefficiency of government intervention and industrial policies, and inadequate fiscal r were all attributed to the strong interventionist role of the state in the economy undestrategy of import substituting industrialization. This role had to be ended, after wprivate domestic and foreign investments were to take over.

Liberalization, deregulation and privatization were widely considered to be the recipe for triggering higher levels of growth and productivity, and reduce income equdeveloping economies (cf. Pastor and Wise, 1997 : 329). New macroeconomic stabilizationprograms were implemented using fiscal, monetary and exchange measures. Struadjustment concentrated on the liberalization of trade and finance, the deregulation of thof the state in the economy, and the privatization of state-owned enterprises. These refoften had the effect of a shock treatment but the eventual benefits were said to be greatethe immediate costs, under the motto: ‘short-term pain for long-term gain’ (Weyland, 2004:145). This set of economic principles became the new mainstream paradigm for developoften identified as neoliberalism, a term with strong political and ideological connotthat historically and analytically is closely interwoven with processes of globalization:

‘Neoliberalism is both a set of policy prescriptions and a paradigm of development withheavy ideological overtones. It is a doctrine of laissez-faire capitalism grounded inneoclassical economic theory, the assumptions of monetarism, modernization theory, and the doctrine of comparative advantage legitimated by the globalist rhetoric of free trade, growth,efficiency, and prosperity’ (Robinson, 2002: 1056).

1.1.2 The spatial restructuring of production

The crisis of the1970s brought drastic changes in the organization of production of leadiU.S. firms. Much of the post-war economic hegemony of the United States had been bon the success of standardized mass production by its largest firms, generally referre‘Fordism’, after the assembly line principle introduced by automobile producer HenryUsing economies of scale, mass production had made a wide range of goods such as c

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televisions accessible to new generations of consumers in the1950s and1960s. By the1970s,however, the limits of mass production emerged, as markets became saturated and consumdemand declined. At the same time, Japanese firms became increasingly successful challenging the hegemony of U.S. firms, thereby benefiting from new modes of organizatand production.

Piore and Sabel (1984) were among the first of a large number of academics, including theFrench ‘regulationist’ school (cf. Lipietz, 1987 ), who explained the deeper causes of the crisis of the advanced capitalist economies in terms of the crisis of Fordism. Several new concepts wintroduced to capture alternative forms of production (e.g. ‘flexible specialization’ (PioreSabel, 1984), 3 ‘lean production’ and ‘Toyotism’ (Womacket al., 1990),4 all commonly coveredby the concept of ‘post-Fordism’. The main differences attributed to post-Fordist and Fordimodes of production are indicated in table1.1. Many of these organizational innovations havebecome the new norm among firms, and terms such as flexible or lean production are nemployed by corporate managers worldwide. The analytical usefulness and validity of ma

these concepts, however, is contested since they are generally based on empirical evidencelimited number of ‘best practice’ examples (cf. Ruigrok and Van Tulder,1995: 32- 35). The spatial impact of these processes has been drastic, both in advanced and developi

economies. In response to changes in competitive positions and declining productivity ralead firms in the U.S. and Europe started to vertically disintegrate their production procesand transfer their most labor-intensive operations to low-wage, low-skill production faciliin South East Asia and Latin America. Major innovations in transport and communicatiotechnologies had drastically reduced the costs of bringing in parts or finished products frdistant production locations. Unlike what table1.1 may suggest, however, the shifting of labor-intensive operations (e.g. assembly of garments and electronics) towards developeconomies essentially followed the Fordist logic of competing on costs of labor.

The spatial reorganization of production processes was first captured under the termNew International Division of Labor (NIDL) (Fröbelet al., 1980). 5 The NIDL thesisgenerated an intense debate throughout the1980s, in particular in Europe. Fröbel, Heinrichsand Kreye (1980), above all called attention to the poor working conditions in many developing economies, while Marxist geographers like Doreen Massey (1984) addressed thedevastating social effects (e.g. unemployment, de-industrialization) of NIDL in the advanceconomies. However, as global sourcing became increasingly complex in the late1980s and1990s, the dichotomy between advanced and developing economies as presented by NIDtheory was no longer considered adequate as an analytical tool in the study of the gloorganization of labor and production.

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Table 1.1 - Attributed differences between Fordist and post-Fordist modes of production

Fordism post-Fordism

economies of scale economies of scope

‘just-in-case’ inventories ‘just-in-time’ inventories

competitiveness through price competitiveness through innovation

vertical integration of labor vertical disintegration of labor

specialized labor tasks multiple labor tasks

Source: Based on Ruigrok and Van Tulder (1995), p. 23.


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‘The heightened production capability of Third World countries, stimulated not only blabor costs but also by the improved skill levels and growing productivity of workersthat the global sourcing of production is becoming a virtual necessity for every corpothat seeks to enhance its competitive position worldwide’ (Gereffi, 1996: 55). Subsequently,much of the debate on globalization, in particular among economists, economic geogrand/or business managers, did no longer focus on the social effects of globalization probut turned to the analysis of the behavior of internationally operating, vertically disintefirms, most commonly referred to as transnational corporations (TNCs).

. The globalization debate

The 1970s and 1980s had experienced dramatic changes in development paradigm response to a worldwide reorganization of production, increasingly captured in ter

‘globalization of markets’ (Levitt, 1983), ‘global shift’ (Dicken, 1986), and ‘globalization of production’ (Gordon, 1988). The ‘great globalization debate’ (Held, 1995; Kalb, 2004),however, took off in the early1990s. The immediate cause of this was the demise of thecommunist power bloc in Eastern Europe and Russia that followed the fall of the B Wall in1989. The crisis of socialism reinforced the conviction of policymakers that any of ‘statism’ was doomed to fail, and that there were no viable economic and poalternatives to neoliberalism. The parallel movement towards economic and polliberalization that had emerged in Eastern Europe and throughout Latin America, unsupporters of two important world historical projects: neoliberal free market supportthe one hand and liberal civil society advocates on the other (cf. Kalb, 2004). Like any dialectical process, however, globalization also generated its own opposition, which discussed in this section.

1.2.1 Globalization as an inevitable outcome The end of the Cold War created a triumphant mood among those sharing the valueeconomic liberalism and the inevitably of progress. Francis Fukuyama (1992) proclaimed the‘end of history’ now that liberalism and free markets had ‘won’. The economic hegemneoliberal policies appeared no longer to be contested. They had become a new set offor granted’ assumptions and basic rules for running an economy, embraced by policyon the left as well as on the right (Babb, 2001: 5). The policy prescriptions associated with thenew dominant paradigm have become widely known as the ‘Washington Conse(Williamson, 1990; 1993),6 the term referring to the influential Washington D.C.-basedpolicy defining institutions such as the U.S. Treasury, the IMF, the World Bank, annumber of conservative think tanks. According to Williamson, the economic reform were taking place in Latin America and Eastern Europe comprised ‘the common co wisdom embraced by all serious economists’ (Williamson, 1993: 1334). In other words, ‘…thesuperior economic performance of countries that establish and maintain outward-orimarket economies subject to macroeconomic discipline is […] sufficiently well establi

to give sensible people better things to do with their time than to challenge its ver(Williamson, 1993: 1330). The influence of the Washington Consensus on development theory and practice

hardly be overstated. The neoliberal paradigm has become firmly rooted withinglobalization rhetoric. Globalization theory has been assumed to explain why liberali

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coupled with the macroeconomic fundamentals ‘worked’. It was argued that ‘…globaliza was good and was there for everyone’ (Kalb, 2004: 13). The basic idea was that ‘…thosecountries which […] follow the right policies will be rewarded, as they can capture foredirect investment which brings technology and market access, and they can also supplemnational savings with international capital flows, thus reaping the benefits of the neexternal environment’ (Gore, 2000: 793). On the other hand, ‘countries which do not follow the Washington Consensus policies will be especially penalized, as they will be cut off thus excluded from the intensifying (and implicitly beneficial) global field of flows’ ( Ibidem).

The tendency to draw lessons from cross-regional comparisons was widespread. The EAsian Newly Industrialized Countries (NICs) –Hong Kong, Taiwan, South Korea anSingapore– were taken as examples to demonstrate that the integration into the globeconomy based on export-oriented manufacturing will result in greater prosperity (cf. K2004). As such, development had increasingly become interpreted as a result of successparticipation in the world market. In the1990s, many developing economies opened up their

economy to foreign direct investment and embarked upon a strategy of export-orientmanufacturing (Robinson, 2002: 1056). The new dominant paradigm had several important consequences for the debate on th

role of nation state, and the importance of ‘place’ in general. Business gurus such as KenOhmae (1990) ultimately envisioned a world without national boundaries. He interpretedthe emergence and intensification of transnational governance structures during these ye–both the increasing importance of multilateral institutions as well as the emergence international treaties such as the European Union (EU), the Asia-Pacific EconomiCooperation Forum (APEC), and NAFTA– as efforts to elevate political and juridicacoordination above the level of the nation state. In his vision, nation states would eventuabecome meaningless entities (Ohmae, 1995).

Manuel Castells (2000) pointed out that the ‘revolution’ of information technology hadresulted in a transition from ‘spaces of places’ to ‘space of flows’, in which location matless, but the insertion within global networks has become ever more important. In a studyinternational financial markets, Richard O’Brien (1992) even –provocatively– declared the‘end of geography’. In many popular views, the world had become increasingly shapedglobal capital and transnational corporations, a development often presented as airreversible, all-determining exogenous force that rapidly shifted across the world in seafor profit opportunities, mobilizing different labor markets and increasingly homogenizconsumer demand.

1.2.2 Globalization as a dialectical processAn increasing number of scholars, among them many geographers, have refuted thsupposed predetermined logic of these ‘hyper-globalist’ accounts that present globalizatioa causal and irresistible force (cf. Dicken, 2003; Vellinga, 1999a; Heldet al., 1999; Cox, 1997 ;Mittelman, 1996a; Hirst and Thompson, 1996; Ruigrok and Van Tulder, 1995). According totheir views, there is no predetermined trajectory towards a unified international markGlobalization should not be presented as an inevitable endpoint. Instead, globalizatio

involves processes that are far more complex, uneven, and ‘messy’ (cf. Dicken, 2003: 14). Themodern world is constituted through and transformed by a complex total of interrelateprocesses rather than by a single unified phenomenon (cf. Dicken, 2003; Amin and Thrift,1995). In the late1980s, Robert Cox already commented that the tendency to globalization isnever complete, and there is nothing inevitable about its continuation:

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‘Any attempt to depict it must not be taken teleologically, as an advanced stage towards the inevitable completion of a latent structure. Rather it should be taken dialectically, as the description of tendencies that, as they become revealed, may arouse opposition that could strive to confound and reverse them’ (Cox, 1987: 258, as quoted in Panitch, 1996: 93).

Several authors have countered the suggestion that the world is evolving towards a superstructure by arguing that the creation of politically negotiated trading blocs shofact be interpreted as a tendency towards regionalization rather than globalization (cf.et al., 2001; Hirst and Thompson, 1996).7 This development may even have become one of the dominant features of the contemporary global economy since most world trade place between and within three regional clusters of economies: the triad of the EU, NAand APEC (Dicken, 2003: 145). These trade blocs are essentially discriminatory in natureclosed to outsiders but open to insiders. As a result, even supposedly deregulated markstill be subject to some kind of political regulation, either by trade bloc regulatio

through multilateral agencies such as the World Trade Organization (WTO).A considerable part of the debate has focused on transnational capital and corporasupposedly ‘bulldozing’ the world economy. Analyses of the behavior of TNCs, hohave demonstrated that these ‘borderless’ or ‘flat earth’ interpretations of hyper-mfootloose firms are clearly at odds with the multiplicity of forms encountered or engein diverse contexts (cf. Dicken, 1986; 2003; Mittelman, 1996a). First, TNCs are not identicaleconomic monsters that stamp a homogenous footprint on the world’s landscapes. Thhighly differentiated in size, geographical reach and ways in which they operate (D2003: 199). Second, both the mobility and regulatory influence of capital seems to have highly exaggerated. TNCs do not exist in a vacuum and markets are never perfectglobal market has become intensely competitive, with firms competing around the wCompetitive advantages can be eroded as rapidly as they are created. Consequentldecision making processes of TNCs often depend on complex structures of internaproduction networks, not just on costs in the narrow sense (cf. Dicken, 2003; Storper, 1997 ;Gereffi, 1996; Mittelman, 1996a).

Most globalist arguments on the role of the nation state are also strongly contestedobvious that the nation state underwent qualitatively changes, and may no longer bstrong unit of analysis on development and social change that it was decades ago.8 This does,however, not mean that nation states have become irrelevant and subordinate to gforces. First, deregulation processes have always been the result of negotiation with doagents and have never been imposed by international capital. Globalization could noadvanced this far without the participation of complementary domestic policiederegulation (cf. Rodrik, 1997 b). Second, ‘…[t]he state has not in the least become obsoletas an actor in its own right on the national and international scenes’ (Vellinga, 1999a: 6). Itcontinues to have an important role in regulating domestic economic and social policistill has considerable power over national resources (cf. Krugman, 1995). Third, trade blocs ormultilateral institutions aim by no means to replace nation-states, which makes it unlikely for them to become anachronisms in the near future (cf. Hirst and Thompson, 1996;

Panitch, 1996). The conclusion is warranted that the world economy is essentially bestructured and restructured by the complex, dynamic interactions of both TNCs and nstates (Dicken, 2003: 20).

The most important part of the debate, however, has focused on the role of ‘plaStudies of the spatial organization of leading industries have demonstrated that the g

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and the local are not, as suggested by Castells (2000), mutually exclusive spaces. Only thefinancial sector and some low-technology industries can be considered truly ‘footloose’. Mother flows of capital and technology must eventually ‘touch down’ in distinct places (‘tglobally, act locally’) (Mittelman, 1996b: 229). There is an increasing awareness that mostoffshore productive activities of TNCs remain dependent on resources and supportinfactors that are strongly tied to a territorial context (cf. Vellinga, 1999b: 283). The notion of ‘embeddedness’, originally introduced by Karl Polanyi (1944), has acquired new relevance as itmakes clear that every production network is ‘grounded’ in specific locations, both physiand in the form of localized social relationships, distinctive institutions and cultural conte(cf. Westen, 2001; Dickenet al., 1995; Grabher, 1993). In fact, certain place-specific conditionsof production that are difficult to reconstitute elsewhere can even become a source fcompetitive advantage, conceptualized by Michael Storper (1997 ) as ‘territorialization’.

By putting the ‘local’ back on the academic agenda, a more complex and differentiaunderstanding of globalization processes has emerged. With it, attention also shifted aw

from Castells’ supposed duality between global ‘flows’ and local ‘fixities’ (Amin and T1997 : 147 ). Thinking in terms of different scales can be helpful in many ways, but they shounot be treated as ‘self-contained boxes’, nor presented as opposed concepts (cf. Dicken, 2003:19). In the words of Eric Swyngedouw: ‘The crux is not […] whether the local or the globhas theoretical and empirical priority in shaping the conditions of daily life, but rather hthe local, the global and other relevant […] geographical scale levels are the result, tproduct of processes, of sociospatial change’ (Swyngedouw, 1997 : 140). A whole variety of economical, political and social institutions operate across a spectrum of geographical scinvolving processes of both collaboration and competition and of differentiated powrelationships (Dickenet al., 1997 : 159). The interactions between local and wider fields of influence are not simply unidirectional, but work both ways (cf. Vellinga, 1999a; Amin and Thrift, 1997 ). The concept of ‘glocalization’ stresses the dialectical nature of processes globalization, involving a parallel and simultaneous movement to the global and the loand expresses both homogenization and fragmentation (cf. Robertson, 1995; Swyngedouw,1997 ; Vellinga, 1999a). The local and the global are deeply intertwined and mutually constitutive (Swyngedouw, 1997 : 137 ).

. Globalization and development

One of the main challenges of development theory and practice has become how capitalize on globalization as a lever for local development. As mentioned abovdevelopment has increasingly become understood within a context of increasing integratinto the world economy. An increased awareness has emerged of the potential otransnational networks of economic activities to develop possibilities for local firms to advantage of the global economy (cf. Palpacuer and Parisotto, 2003). In the words of Gary Gereffi: ‘One of the central tasks in fashioning national development strategies is determine how to plug into transnational production systems in a way that allows nations

increase their productivity and international competitiveness while generating a highstandard of living for the local population’ (Gereffi, 1996: 79).

1.3.1 Global value chains and local clustersIn the1990s, the NIDL thesis had lost much of its attractiveness to development theorists

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because its sweeping generalizations failed to explain the new complexities of productRobinson, 2002). Instead, network-based approaches, connecting firms into relationstructures at different organizational and geographical scales, have received muchacademic attention in recent years. Almost all industries are nowadays connected withproduction networks of independent yet interconnected firms, usually driven by a relsmall number of lead firms from advanced economies.The production of any good or can be conceived as a production chain, which involves ‘… a transactionally linked seof functions in which each stage adds value to the production of goods or services’ (D2003: 14).

The most extensively elaborated conceptualization in this respect is the approaterms of ‘global value chains’, or ‘global commodity chains’ in its original conceptuaRooted in world systems theory, it refers to sets of inter-organizational networks cluaround one commodity or product, linking households, enterprises and states to one anin the world economy (Gereffi and Korzeniewicz, 1994). The approach focuses on the global

organization of specific industries –in particular the garment, electronics and automindustry are well documented– and addresses the issue of input-output structure, and prelations or governance within the industry. The flows of both material and non-maphenomena, from single firms to global commodity chains, slice through boundarihighly differentiated ways, bridging the macro-micro gap by highlighting the local context of global production (cf. Gereffi, 1996).

Although global value chain analysis recognizes that these networks are socconstructed and locally integrated, their social and institutional context tends to reunderexposed (cf. Palpacuer and Parisotto, 2003: 103). These contexts of local networks arebest highlighted by the large body of literature inspired by Alfred Marshall’s classical of industrial districts (1961). Following Piore and Sabel (1984), many other scholars have triedto explain how localized agglomerations such as Emilia Romagna in Italy, B Württemberg in Germany, and Silicon Valley in the United States have combined succexport performance of primarily labor-intensive or light-manufacturing goods, with a hpaid, skilled workforce. In many ways, the global value chain approach and the varcluster approaches (e.g. industrial districts, specialized clusters, innovative milielearning regions) are complementary. Individual firms are likely to be incorporated inttypes of networks. The global value chains involve the vertical linkages (columns, or filières )of firms within a specific industry, whereas clusters involve the horizontal linkages o within a specific region. Typically, global value chains are anchored within local prodagglomerations, or clusters.

The basic idea behind cluster theory is that the positive spillovers of geograconcentrations of interconnected companies and associated institutions in one partfield, competing as well as cooperating, are greater than the sum of their parts (cf. P1996; 1998; Altenburg and Meyer-Stamer, 1999). Once established, a cluster tends to grow through a process of cumulative, self-reinforcing development, involving –among otheattraction of more related activities, enrichment of industrial atmosphere and a thickenlocal institutions (Amin and Thrift, 1995: 102). According to Ann Markusen (1996), they

become ‘sticky places in slippery space’. The importance of the region as the bacompetitive advantage was also

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