Geography Reference
In-Depth Information
transfers, and of financial transactions. Both require and allow for new
corporate organizational structures and relationships which previously
had not been possible (Freeman and Soete 1997; Guy 2007), and which
entail fundamental changes in spatial transactions, knowledge flows and
firm behaviour. The traditional approaches to industry supervision within
North America and European markets were therefore progressively
becoming out of step with changes in the competitive environment, and
these changes themselves called for appropriate governance and institu-
tional changes at a much larger scale than previously envisaged. However,
the sheer magnitude of the technological, institutional and organizational
changes which were about to take place were far beyond the imagination
of any market commentators in the 1980s, and in many ways, as we will
see in the next paragraphs, the modern era of genuine globalization com-
menced right at the end of this decade.
6.5.1
Institutional Changes and Regionalism
In terms of institutional transformations, the years between 1989 and the
mid-1990s saw various fundamental transformations in the institutional
structure of the global economy. These changes were the entry of a series
of countries into the global labour market for the first time, the growth in
the number of bilateral investment treaties, and the creation of areas of
economic integration at the macro-region level.
In terms of the expansion of global labour markets, following the
political crisis in 1989 the process of deregulation and competition in the
Chinese economy was massively accelerated, and the country for the first
time in over half a century rapidly began to open up to global investment
and market opportunities. The opening up of China brought some 760
million workers into the global labour market for the first time (Venables
2006). In the same year the Berlin Wall collapsed and within twelve months
the planned-economy system of the former communist arena had almost
entirely disappeared. The fall of the Berlin Wall marked the beginning of
the end of the post-Second World War period polarized order, and the
countries to the East of the former Iron Curtain re-emerged as 'transition
economies', due to their process of radical transformation entailing politi-
cal, economic, cultural and diplomatic transition (Rodríguez-Pose 2002).
Taken together, the emergence of the transition economies brought some
260 million workers into the global labour market for the first time in over
half a century (Venables 2006). Meanwhile, the second wave of funda-
mental economic reforms in India commenced in 1991, facilitating both
competition and international investment in the Indian economy: such lib-
eralization process added up another 440 million workers (Venables 2006).
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