Tendencies in global production of knowledge economy

When it comes to knowledge economy, the world geography can be divided into two territories: Atlantic North (Europe and North America) as the centre of innovative technology and the rest. How to understand this global production of knowledge counts an importance in that we now have entered the next industrial revolution era, from the production of goods to the production of information. To understand this global production tendencies I’d like to put a glasses to examine: One side of lenses is called the segmentation of production, and the other side is called the centralisation of command. These two lenses together become a tool for the understanding of the global structure of development and also, of underdevelopment.

The global segmentation of production
Production-wise, the centre produces with cheaper price whereas the periphery produces with higher price due to its lack of labour efficiency. Those dynamics construct a global value chain where many nations are linked together to realise various levels of production. Within this chain, high profitability concentrates to the complex labours. This divides labour into two different categories: qualified labour and no-qualified one. The more qualified the labour becomes, the higher and more capital it earns. On the other hand, less guarantees are made for no-qualified labour, and this division is merely political process, mapping the economic structure of labour exploitation, as the capitalism develops as such.

Technology and knowledge economy explains the division of production process into three stage: Concept, Production and Commercialisation.

[Concept] stage charges design the product. At this stage the production of knowledge is made. It’s the script for play, and model for the structure.

[Production] stage charges the reproduction of the script made in concept stage. subcontract of franchises seals.

[Commercialisation] stage charges the brand-naming and communication to the public consumers. This stage is closely attached to production stage.

IPhone is designed in California (concept), but made in China (production), and purchased in every countries (commercialisation). Starbucks promoted the working environment in café with personalising customer services like name-calling (concept), which every franchise reproduces the same manual everywhere in the world (production and commercialisation). McDonalds initiated the fast auto-servicing food mechanism (concept), which later expanded to all around the world (production and commercialisation) until to make globally standarised index like Big Mac index.

One more observation can be made that the Concept and Commercialisation stages are concentrated in Centre due to its high profitability, and Production is normally concentrated in Periphery economy.

Centralisation of command, power-exercising of centre
Not only the global production is divided as explained above, the centre also takes control over the periphery production, and this process has become standardised under the name of governance. An example of a multinational company can be used for further understanding. In this case, the company must guarantee its product quality built as its standard. The governance is upon controlling not only the product quality but also the delivery time and the standard. An actor within this chain always can decide whether to leave the chain strategically, but when staying inside the chain, he or she should be submissive under the juridical boundaries. It means, in other words, that if a production doesn’t guarantee its quality, this actor is obliged to be imposed sanctions on, be penalised and even be expulsed.

This is directly linked to the understanding of underdevelopment: this underdeveloped countries should play submissive under these juridical boundaries set by powerful nations. The national sovereignty becomes the meal on the question table. Monsanto has standardised the production of soy both in Argentina and in Brazil, as they both being a mayor soy production nations. It would be easily substituted to another country if one country decides to promote a betterment for rural labours- guaranteeing their basic wage for example, then the Monsanto production chain is likely to move to Brazilian side, leaving the Argentine production behind, causing unemployment rise and GDP fall. Under the rule of Monsanto, those two sovereign nations should negotiate each other to conflict and to yield.

The tendency we see might tell us that there is a gradual change of world knowledge economy geography, shifting its centre from Atlantic North to Pacific. Europe and East side of USA have become more financial centre of the world, while California counting San Francisco becomes new technological innovation centre of the world counting numerous tech companies of highest profitability like Google and more. Asia provides the lowest labour cost for the value chain, as well as being the frontiers to experiment newest technologies like in Korea, Japan and East China. The rise of Trans-Pacific agreement is also adding to the tendency of new centre of global knowledge economy, which links to the crisis of Europe structurally explained for the past decade.

Truly, we have entered to the era of re-orient.

Still critics can be made when to think of examples like China and Korea being a new innovation centres just as the California. The labour cost of South Asia is also rising, and the whole industrial value chain is again shifting. Yes, China plays a critical role in this. China had played a leading role in Asia, turning her superávit from Europe and USA into déficit with other Asian countries, redistributing the trade wealth with other Asian nations. Now China is on the way to generating superávit even with other neighbouring countries.

The structure of Concept-Production-Commercialisation would also stay fit? We didn’t count yet the variable of labour automation. Within a technology-profitable nation, there divides qualified labour and non-qualified labour. How is to prevent the margination of those non-qualified labour? And how to explain the tendency?

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