The Globalization Reader, 5th Edition

22 The Global EconomyOrganization, Governance, and Development

Gary Gereffi

The Emergence of International Trade and Production Networks

The growth of world trade has probably received the most attention in the globalization literature because of its direct relevance to employment, wages, and the rising number of free trade agreements around the world. The most common causes usually given to explain expanding world trade are technological (improvements in transportation and communication technologies) and political (e.g., the removal of protectionist barriers, such as tariffs, import quotas, and exchange controls, which had restricted world markets from 1913 until the end of the Second World War). It is also important to acknowledge that the volume of international trade depends to a considerable degree on how boundaries are drawn, both for different geographies of production and according to whether trade covers final products only or whether it also includes intermediate inputs. However, even though the share of trade in world output surpassed its 1913 peak in the 1980s and 1990s, the sheer volume of trade is probably not sufficient to argue for a qualitative break with the past.

Of far greater significance are several novel features in the nature of international trade that do not have counterparts in previous eras. These suggest the need for a new framework to understand both patterns of competition among international firms and the development prospects of countries ...