Globalization of Production

○​ Definition: The current era of globalization has enabled firms to reorganize and
relocate their activities globally due to advancements in transportation and
technology. This involves dividing a global value chain, which is the sequence of
activities required to produce a good or service.
○​ Multinational Corporations (MNCs): MNCs operate in multiple countries and
are significant in globalization. They conduct foreign direct investment (FDI) and
possess tangible assets and employees in foreign countries.
○​ Global Value Chains (GVCs): GVCs determine "who gets what, when, and how"
in the global economy. They present opportunities and challenges for both home
and host countries.
○​ Rise of Global Production: Foreign investment and international production
have historical roots, but the current scale and fragmentation in GVCs are
unprecedented. Firms now break up their value chains, locating activities based
on competitive advantage rather than geographical convenience.
○​ Key Enablers:
■​ Politics: Liberalization of trade is crucial for the globalization of
production, requiring low tariff barriers.
■​ Technology: Improved transportation (e.g., containerization) and digital
revolution (e.g., modularity) have extended the geographical reach of
businesses.
●​ Measuring Global Production
○​ Foreign Direct Investment (FDI): Rapid increase in FDI before the 2008 global
economic crisis is a key indicator. Flows have since returned to pre-crisis levels,
with developing countries playing an increasingly important role.
○​ Outsourcing: Reallocation of tasks from one firm to another, often across
borders, is a significant aspect of global production. It is difficult to measure the
value of outsourcing transactions from general trade data.
●​ Global Value Chains: Governance and Location
○​ Governance: Coordination of interdependent activities within global value
chains. Options range from pure market relations to hierarchical control through
FDI.
 ○​ Make or Buy Decision: Firms decide whether to perform activities in-house or
outsource based on transaction costs.
○​ Network Forms: GVCs can take various network forms that are neither pure
markets nor hierarchies. Gereffi distinguished between buyer-driven and
producer-driven chains.
○​ Governance Types:
■​ Market relations: prevail when transactions are not complex, product
specifications are easily specified, and supplier capabilities can easily
meet these demands.
■​ Modular value chains: interfaces between complex modules can easily
be codified, and there are suppliers capable of providing the sophisticated
modules on either side of the interface.
■​ Relational value chains: involve complex transactions, product
specifications that are not easily codified, and highly capable suppliers.
■​ Captive value chains: complexity of transactions and the ability to codify
this complexity is high, but the capabilities of suppliers are low.
■​ Hierarchical coordination: product specifications cannot be codified,
products are complex, and highly competent suppliers cannot be found.
○​ Location: Decisions about where to locate activities are influenced by factors like
resources, markets, and cost of labor.
●​ China as the World's Factory
○​ Dominance: China has become a dominant force in global manufacturing since
its transition to a market economy.
○​ FDI Recipient: China is a leading destination for FDI, with foreign-invested
factories playing a key role in Chinese manufacturing.
○​ Regional Integration: China is more accurately viewed as a regional production
hub, with significant intra-industry trade within Asia.
○​ Local Clusters: Specific townships and villages in China often specialize in
particular products and dominate world markets.
○​ Rising Costs: Increasing labor costs and currency appreciation in China are
beginning to threaten its competitive advantage.
●​ Upgrading in Global Value Chains
○​ Barriers to Entry: The distribution of gains within a value chain is determined by
barriers to entry.
 ○​ Economic Upgrading: Increasing competitiveness by capturing higher
value-added activities.
○​ China's Challenges: Despite significant participation in GVCs, Chinese firms
have faced challenges in capturing gains and upgrading capabilities.
○​ Domestic Market: The growing domestic market in China presents new
upgrading opportunities for domestic firms.
●​ Key Considerations
○​ Opportunities and Risks: Globalization of production presents opportunities and
risks for both developing and developed economies.
○​ Uneven Distribution of Gains: Gains from globalization are not evenly
distributed, and public policy must address imbalances.
○​ Location Specific Advantages: Firms invest abroad to access immobile
resources of a particular place.
○​ Modular Production: Modularity does not inevitably lead to outsourcing, but it
creates the possibility. A modular system is composed of units (or modules) that
are designed independently but still function as an integrated whole.

Timeline

●​ Sixteenth Century: Chartered trading companies, such as the Dutch East India
Company, established foreign production facilities.
●​ Nineteenth Century: The Industrial Revolution increased demand for raw materials,
leading companies to own and manage their sources. Vertical investments upstream and
downstream resulted in a hub-and-spoke model of international production.
●​ Early Twentieth Century (1920s-1930s): In response to rising protectionism, firms
began making horizontal investments abroad, duplicating manufacturing capabilities in
foreign markets. American companies like General Motors and Ford increased their
manufacturing facilities in Europe.
●​ Post-World War II Era: The United States began a return to liberalism with the
Reciprocal Trade Agreements Act of 1934.
●​ 1950s: Commercial jet services were introduced.
●​ Late 1950s: Standardized shipping containers were introduced, dramatically reducing
transportation friction.
●​ 1960s: IBM introduced the System/360, which led to a shift toward modularity in the
electronics industry.
 ●​ 1964: General Instruments began manufacturing in Taiwan with the encouragement of
the Taiwanese government and the United States Agency for International Development.
●​ 1980s:
○​ Early 1980s: Electronic Manufacturing Services (EMS) firms grew as IBM began
looking for key suppliers for its personal computers.
○​ China began its transition to a market economy, emphasizing foreign investment.
●​ 1982-2008: FDI inflows increased dramatically, from $59 billion to $1,697 billion.
●​ 1990s:
○​ New software increased firms' ability to digitize instructions, enabling the
codification of interfaces within a product.
○​ The rise of the internet.
●​ 2001: China's wages in the manufacturing sector have increased by an average of 12%
a year.
●​ 2005: Foxconn became the largest EMS firm.
●​ 2008: The global economic crisis caused a sharp drop in FDI flows, but they have since
returned to pre-crisis levels.
●​ 2009: China surpassed the US in automobile sales.
●​ 2011: China surpassed the US in food and groceries and smartphone sales.
●​ 2014: China received US$129 billion in FDI, more than any other country in the world.

Global value chain (GVC) governance choices are determined by several key variables.
According to Gereffi, Humphrey, and Sturgeon (2005), these include:

●​ Complexity of inter-firm transactions: The nature and intricacy of the interactions

between different firms in the value chain influence the governance structure.
●​ Degree to which complexity can be codified: The extent to which the complexity of
transactions can be translated into a set of digital instructions affects governance
choices. Modern technology enables some transactions to be easily codified, while
others cannot.
●​ Extent to which suppliers have the necessary capabilities: The ability of suppliers to
meet the requirements of buyers is a critical factor.

Based on these variables, different governance types emerge:

 ●​ Market relations tend to prevail when transactions are not complex, product
MR
specifications are easily specified by the buyer, and supplier capabilities can easily meet
these demands.
MVC ●​ Modular value chains occur when the interfaces between complex modules can easily
be codified, and there are suppliers capable of providing sophisticated modules.
●​ Relational value chains involve complex transactions, product specifications that are
RVC not easily codified, and highly capable suppliers. These chains are characterized by
mutual dependence, close relationships, and the exchange of tacit knowledge.
●​ Captive value chains arise when the complexity of transactions and the ability to codify
CVC this complexity are high, but the capabilities of suppliers are low. In these cases, the lead
firm must provide core design elements and significant assistance to the supply firm.
●​ Hierarchical coordination is employed when product specifications cannot be codified,
HC products are complex, and highly competent suppliers cannot be found. In this scenario,
a firm relies on in-house capabilities.

PI 100

Key Themes and Concepts

●​ Haste vs. Legal Formalities: Understand the contradiction between the hurried nature
of Rizal's trial and the meticulous observance of legal formalities.
●​ Irrelevant vs. Inconclusive Evidence: Recognize the types of evidence presented
against Rizal and why they were considered weak or unrelated to the charges.
●​ Rizal's View on Revolution: Grasp Rizal's advocacy for education and civic virtue as
prerequisites for reforms, his opposition to violent revolution, and his preference for
changes from above.
●​ The American Colonial Appropriation of Rizal: Remember that the American
colonizers learned about Rizal from counter-revolutionaries: the pro-American Trinidad
H. Pardo de Tavera, and the "infamous" Wenceslao E. Retana.
●​ The complexity of Rizal's Politics: Understand the American's first image of Rizal
provided by Tavera, and how Retana's biography also started the now standard reading
of Rizal's novels.

Timeline of Events
 ●​ Key Dates and Sequencing: Know the detailed timeline of Rizal's trial, from the
endorsement of the case to Dominguez on December 2, 1896, through his execution on
December 30, 1896.
●​ Dapitan Exile: Note the start of Rizal's exile in Dapitan in 1892 and the key activities
and developments during this period.

Rizal's Trial: Critical Issues

●​ Accusations: Rizal was accused of founding illegal associations and of promoting and
inciting rebellion.
●​ Problems with Evidence: The prosecution struggled to prove Rizal's direct involvement
in the rebellion or that the Liga Filipina's statutes were subversive.
●​ Witness Reliability: The testimonies of witnesses were questionable, especially since
some were co-accused, potentially making them partial.
●​ Defense Counsel: Rizal was allowed to choose his defense counsel from a list, but all
were low-ranking officers.
●​ Manifesto Denial: Rizal's request to issue a manifesto disavowing the revolt was initially
approved but later rejected because it lacked loyalty to Spain.

Rizal in Dapitan: Activities and Projects

●​ School in Talisay: Rizal established a school that offered a progressive education,

emphasizing practical skills, character development, and reasoning.
●​ Community Projects: He engaged in community improvement projects such as
constructing a water system and promoting better fishing methods.
●​ Medical Practice: Rizal provided medical services to the local population.
●​ Economic Activities: He participated in agriculture, business ventures, and scientific
studies.

Rizal's Educational Philosophy

●​ Progressive Education: Rizal's school in Talisay reflected principles of progressive

education, emphasizing student-centered learning, practical skills, and the development
of the whole person.
●​ Himno a Talisay: Understand the significance of the "Himno a Talisay" as a
representation of the school's values and a reflection of Rizal's educational philosophy.
Key Figures and Their Perspectives

●​ ** அதிகாரிகள் Spanish Officials**: Understand the roles of Governor-General Blanco,

Rafael Dominguez, Nicolas de la Peña, and others in the trial.
●​ Defense Counsel: Note the arguments of Rizal's defense lawyer, D. Luis Taviel de
Andrade, emphasizing Rizal's lack of support for the uprising.
●​ Other Filipino Intellectuals: Consider the views of Rizal's contemporaries and later
historians on his role in the revolution.
●​ Valenzuela's Testimony: Consider Valenzuela's changing statements about Rizal's
attitude toward the revolution, influenced by different circumstances.

Important Documents

●​ Rizal's Manifesto (December 15, 1896): Analyze the contents of Rizal's manifesto and
understand why it has been interpreted as a rejection of the revolution by some.
●​ Defense del Dr. Jose Rizal (December 12, 1896): Know that Rizal laid down his
political views here before the Judge Advocate General, who was not quite impressed.
●​ Mi Ultimo Adios: Note that this was Rizal's last poem.

Interpretations and Debates

●​ Rizal as a Reformist vs. Revolutionary: Be aware of the ongoing debate about

whether Rizal was primarily a reformist or a supporter of revolution, considering different
interpretations of his actions and writings.
●​ American Colonial Influence: Understand how the American colonial regime shaped
the narrative around Rizal to promote their agenda.
●​ Constantino's Critique: Be familiar with Renato Constantino's critique of Rizal and the
arguments against venerating him uncritically.

Legacy and Significance

●​ Rizal's Impact: Understand how Rizal's writings and martyrdom influenced the
Philippine Revolution and his enduring legacy as a national hero.
●​ Relevance to the 21st Century: Know about Rizal's accomplishments in Dapitan and
his vision of community development, education, and social entrepreneurship that can
still apply to the problems the present generation faces.
Trial of Rizal Timeline:

●​ August 1896: The revolution, instigated by Bonifacio, commences, spreading to Cavite

under Aguinaldo.
●​ November 3, 1896: Rizal arrives in Manila and is confined incommunicado in Fort
Santiago.
●​ November 20-21, 1896: Rizal undergoes a preliminary investigation.
●​ December 2, 1896: Governor-General Ramon Blanco endorses the case to Juez
Instructor Rafael Dominguez to formally begin the judicial process.
●​ December 3, 1896: Dominguez formally opens the case against Rizal.
●​ December 5, 1896: Dominguez submits his report. Blanco endorses the case to Auditor
General de Guerra Nicolas de la Peña.
●​ December 7, 1896: Peña submits his dictamen.
●​ December 8, 1896: Feast of the Immaculate Conception. Official holiday, but the trial
proceeds.
●​ December 9, 1896:
○​ Blanco appoints Enrique de Alcocer as fiscal (prosecutor).
○​ Alcocer submits his judgment on the merits of the case.
○​ The fiscal instructs the juez instructor to prepare all materials for the trial.
○​ A list of 106 officers eligible to be Rizal's defense counsel is drawn up.
●​ December 10, 1896:
○​ Rizal is shown the list and chooses Luis de Taviel.
○​ Taviel accepts.
○​ Rizal petitions to issue a manifesto to disavow the unauthorized use of his name,
sent to Governor Blanco, who endorses it to the auditor general de guerra.
○​ Process for confiscation of Rizal's properties begins.
●​ December 11, 1896:
○​ The juez instructor decides it is "unnecessary" for Rizal to confront his accusers.
○​ Rizal is formally arraigned.
○​ Procedure begins for confiscating Rizal's properties to "reimburse" the
government one million pesos for damages.
○​ Auditor General de Guerra says there is no objection to Rizal's request to
address a manifesto to his sympathizers.
●​ December 12, 1896:
 ○​ The juez instructor declares the case ready for trial.
○​ Camilo de Polavieja assumes office and endorses the case to Auditor General de
Guerra Peña for final action.
○​ Rizal writes memorandum for his defense.
●​ December 13, 1896: Polavieja orders the juez instructor to comply with Peña's decision
to allow Rizal to write a manifesto.
●​ December 15, 1896: Rizal writes his Manifesto.
●​ December 17, 1896: Peña's decision.
●​ December 18, 1896: Polavieja endorses Rizal's manifesto to Peña.
●​ December 19, 1896: Peña renders his unfavorable verdict.
●​ December 21, 1896: Alcocer submits his Brief for the Prosecution.
●​ December 22, 1896: The prosecutor's Brief is shown to Rizal and his defense counsel.
●​ December 24, 1896: Judges of the court martial are appointed.
●​ December 25, 1896: Christmas Day. The trial proceeds. Rizal is shown the list of
judges.
●​ December 26, 1896:
○​ The court martial is held. Judges listen to the prosecutor's Brief, the defense
counsel's Brief, and Rizal's "Adiciones a mi defensa".
○​ Sentence of death is pronounced.
○​ The death sentence is communicated to Polavieja, who endorses it to Auditor
General de Guerra Peña for comment.
●​ December 27, 1896: Peña recommends approval of the death sentence.
●​ December 28, 1896: Polavieja orders the death sentence to be carried out, specifying
the day, hour, place, and manner of death.
●​ December 29, 1896: The death sentence is read to Rizal, and he is placed "en capilla".
●​ December 30, 1896: Rizal is shot at 7 a.m. in Bagumbayan field.
●​ June 28, 1897: It is noted that documents required from Laguna had not yet been
received.
●​ August 1897: Some documents from Laguna are ready.
●​ April 1898: Final papers are obtained.

Timeline of Rizal's Exile in Dapitan

●​ 1888: Rizal declares that our sacred mission is the formation of the Filipino nation.
●​ 1891-92: Rizal stays in Hong Kong. The idea of Liga Filipina was conceived, and Rizal
drew up the proposed statutes.
●​ 1892: Rizal was exiled to Dapitan.
○​ July 17, 1892: Rizal arrives in Dapitan.
○​ July 24, 1892: Rizal attends to a man injured by firecrackers.
○​ Rizal is living in the house of the governor and military commandant, Capt.
Ricardo Carnicero.
○​ Rizal writes in his diary of hectic preparations for his departure. Of his life in
Dapitan, however, he could only write, “I have been in that district four years,
thirteen days, and a few hours.”
○​ Rizal is presumed by the Spanish colonial state to be punished and isolated as a
recalcitrant subversive.
○​ Rizal bought, with Carnicero and another Spaniard residing in Dipolog, a lottery
ticket. Rizal's lottery ticket won second prize.
○​ Rizal is working with the people of Dapitan, using local resources and responding
to local needs.
●​ 1893:
○​ The Liga Filipina was reorganized while Rizal was in Dapitan.
○​ Rizal writes to Blumentritt describing his life in Talisay.
●​ 1895: Rizal writes Himno a Talisay, dedicated to his pupils.
●​ December 1896: Rizal was tried in Fort Santiago for being “the principal organizer and
living soul of the Filipino insurrection.”