ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Imperialism in the 21st Century

Global Value Chains and International Labour Arbitrage

Imperialism in the 21st Century

Imperialism has taken a new form in the 21st century in the shape of global value chains or global production networks. The GVCs involve the utilisation by lead firms from headquarter economies of differences in international labour costs or international labour arbitrage to earn superprofits or rents. This article deals with the economic mechanisms and processes in producing various types or forms of imperialism.

Starting with the simplest definition of imperialism as the extra-territorial or extra-national extension of power and exploitation, I argue in this paper that imperialism has taken a new form in the 21st century. This is in the shape of what are called global value chains (GVCs) or global production networks (GPNs). The GVCs involve the utilisation by lead firms (from headquarter economies) of differences in international labour costs or international labour arbitrage to earn superprofits or rents. More accurately, the rents are the result of international arbitrage in the overall production costs—not just in labour costs. As the Rana Plaza collapse in Dhaka tragically brings to mind, the cost arbitrage also occurs on account of the lower costs of poorly constructed buildings used for production in the supplier economies. Cost arbitrage also involves a transfer of negative environmental consequences to supplier economies.

If we borrow Richard Baldwin’s (2016) terms, the GVC rents are the superprofits earned by the differences in production costs between production in headquarter economies and supplier economies. These GVC rents are superimposed on earlier forms of imperialism such as unequal trade and the export of capital.

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Updated On : 16th Aug, 2018

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