Integrating Finance into Global Production Networks

Abstract

While successful in its aim of 'globalizing' regional development, the Global Production Network (GPN) approach has thus far paid less attention to the role of finance in the dynamics of the global economy and regional development. This lacuna is significant as finance is arguably even more globalised and networked than production. To address this gap the paper distills the concept of the Global Financial Network (GFN) from financial geography and related scholarship, with advanced business services, world cities, and offshore jurisdictions at the core. Interactions between the GPN and the GFN are discussed, focusing on the financing and financializing of GPNs and the co-evolution of globalization and financialisation. Integrating finance into GPN research entails more than a simple extension of the approach; it would also enrich it conceptually, and enable it methodologically and empirically.

Born to be Sold: Start-ups as Products and New Territorial Life Cycles of Industrialization

“…Finally, territorial innovation processes are embedded in increasingly global production and financialized networks (Coe et al, 2013;Corpataux et al, 2009). In the traditional lifecycle approach to territorial innovation, spatial division of labour were traditionally described as a 'push' movement (Tichy, 2011): the relocation of activities and foreign direct investments are undertaken by mature companies from their home region towards specialised and lower-cost supplying regions.…”

“…In a knowledge and financial economy characterized by combinatorial knowledge dynamics (Crevoisier and Jeannerat, 2009), by even shorter project-based innovations (Grabher, 2002a) and by global financial and production networks (Coe et al, 2013), this idealized approach of regional innovation and growth is called into question. Through outsourcing and corporate venture strategies, multinational companies step in at an early stage of the enterprises' incubation (Chesbrough, 2002;Garel and Jumel, 2005;Ben Hadj Youssef, 2006).…”

The Geographies of Industrialised Finance: Probing the Global Production Networks of Asset Management

“…Hence, the notion of value creation with regard to finance, in particular to securitised financial capitalism, challenges the GPN's original meaning. The GFN approach (Coe et al ) implicitly takes strong issue with this conceptual inadequacy. Its proponents frame the profound changes in financing and financialising global manufacturing (Wójcik and Camilleri ) by adding yet another analytical stratum to the GPN approach; it combines three key financialisation drivers, that is, the nexus of advanced business services (ABS) firms and offshore jurisdictions (Wójcik ), and the governance functions in the global economy's powerful control centres, i.e.…”

“…In contrast, the recent idea of GFN (Coe et al ) ties in with the new realities of enhanced capital mobility and the new dynamics on the global capital markets to finance production. Its stimulating thoughts on how these shifts alter the traditional networks of global production are based on the observed financialised practices promoted by powerful new actors, i.e.…”

“…To date, such research has only marginally attracted epistemological interest by economic geographers. Coe et al () reignited the largely suspended dialogue between production and finance through the GPN‐related heuristics of Global Financial Networks (GFN), which are intended to scrutinise how finance pervades and shapes the entire operation of global production of manufactured products. Albeit this is in itself a laudable objective, the kind of finance addressed in the GFN framework remains rather vaguely defined.…”