Global production network: The new template of power and profit in the regime of Empire

Abstract

Functional fragmentation of production and spatial dispersion actualized through global production networks (GPN) increases participation of developing South in global trade by way of specializing in particular tasks. This change in production organization as conceived in GPN literature is a new phase of fast-tracking industrialization in developing countries. A continuous process of upgradation and efficient governance would allow developing countries to move up the value ladder. The paper first of all argues that because of higher participation rate, it is largely the advanced countries who accounted net gain in returns while most of the developing countries incurred a net loss with increased participation in global production network. The paper then questions the notion of ‘value added’ and analyses the asymmetry as a structural phenomenon of global capitalism invoking Marxian notion of production, appropriation of surplus value and its distribution in the form of rent and profit. Value capture takes place by inter- and intra-industry transfer of surplus and through asymmetric distribution of potential rents conditioned through the new architecture of institutions in the era of globalization. Finally, the paper concludes that global production network emerges as the new template of power and profit in the age of Empire.