Globalization and Labor Market Integration in Late Nineteenth- and Early

Twentieth-Century Asia
By: Gregg Huff and Giovanni Caggiano

Beginning in the late nineteenth century, globalization swept through Asia, transforming
its product and labor markets. By the 1880s steamships had largely replaced sailing vessels for
transport within Asia as well as to Western markets, and shipping fares had begun to fall sharply.
Also already underway was the mass migration of Indian and Chinese workers, principally from
the labor-abundant areas of Madras in India and the provinces of Kwangtung (Guangdong) and
Fukien (Fujian) in Southeastern China, to land-abundant but labor-scarce parts of Asia. Chief
among the immigrant-receiving countries were Burma, Malaya and Thailand (Siam) in Southeast
Asia. Indian and Chinese labor inflows to these countries constituted the bulk of two of three main
late nineteenth- and early twentieth-century global migration movements, the other being
European immigration to the New World. Immigration to Southeast Asia was almost entirely in
response to its growing demand for workers which, in turn, derived from rapidly expanding
demand in core industrial countries for Southeast Asian exports.
Studies by Latham and Neal (1983) and by Brandt (1985, 1989) establish the development
of an integrated Asian rice market beginning in the latter part of the nineteenth century (see also,
.Myung, 2000). Furthermore, a series of articles and books by Williamson and his co-authors
reveal internationally integrated commodity markets and relative factor price convergence in
conjunction with pre-World War II globalization.( Williamson, 2000, 2002; O’Rourke and
Williamson, 1999; Hatton and Williamson, 2005). But in contrast to work on product market
integration, the possible emergence of an integrated Asian labor market has attracted less
attention. In part this reflects the lack of Asian wage data. As Harley (2000, p. 928) observes,
“analysis of the low-wage periphery, which is most relevant to modern [globalization] debate, is
restricted by data availability”. This article makes available for the first time the data needed to
test for labor market integration over a large part of Asia.
The article has two main aims. One is to analyze whether as part of pre-World War II
globalization an integrated Asian market for unskilled labor existed to encompass Asia’s chief
emigrant-sending regions of South India and Southeastern China and the principal Southeast
Asian receiving countries for Indian and Chinese immigrants. Our metric for integration,
following both econometric work on GDP convergence and Robertson’s recent analysis of
integrated labor markets, comprises three complementary criteria: (i) that wages do not diverge
from a common trend; (ii) that over time wage dispersion does not increase; and (iii) that a
correction mechanism pushes wages towards an equilibrium relationship after shocks. It can be
misleading, as Robertson (2000, p.728) warns, to rely on price as a criterion for integration.
Markets are integrated if adjustment mechanisms operate to correct deviations from a wage
differential or “gap”.
Second, the article aims to compare wage trends in the area of Asia from South India to
South China and including Burma, Malaya and Thailand with an industrial core of the global
economy, defined as the United Kingdom, United States, Germany and France. Were unskilled
labor markets in Asia and the industrial core similarly affected by globalization such that in these
two parts of the world wages followed a common trend? Or, in contrast to commodity markets,
was globalization in Asia and the industrial core associated with a drifting apart of real unskilled
wages? We argue that by the late nineteenth century South India, Southeastern China and the
three Southeast Asian countries had become integrated and constituted a unified labor market.
Furthermore, Asian evidence reveals a period of real wage convergence prior to the 1930s. But
labor market integration that characterized Asia, and also obtained in the industrial core, stopped
at the geographical frontiers of each of these two regions. Unlike Asia’s export of primary
commodities, flows of Asian labor hardly penetrated either the core industrial countries, or the
wider Atlantic economy. The pre-World War II labor market pattern was, instead, one of strong
divergence between Asia and the world’s rapidly developing and industrializing core economies.

References:
https://www.gla.ac.uk/media/Media_32242_smxx.pdf
 The Rise of the Global Corporation
By Deane Neubauer

Part One: The Historic Rise of the Global Corporation – Three Periods
As indicated throughout this text, global corporations are inseparable from the more
general phenomenon of globalization itself. It follows that how one identifies globalization
serves to ‘locate’ global corporations, both in the complex interactive pattern defined by
globalization and within given historical periods. This chapter situates the global corporation
in three broad historical periods, of which the last two have become the most relevant.
The approach to the study of globalization sometimes termed ‘historical
globalization’ locates the phenomenon itself in early patterns of trade and exchange
(Bentley, 2003; Gills and Thompson, 2006;Moore and Lewis, 2000). In early historical periods as
both cities and countries extended their reach beyond their own borders, this view holds, a
form of globalization was initiated which then followed complex patterns of interactive
engagements organized through trade and directly influenced by the emergent and
subsequently dominant technologies ,especially in shipping and navigation(Harvey, 1990).
As Moore and Lewis contend, the entities operating within this environment were
functionally and organizationally not so very different from contemporary organizations, being
possessed of ‘head offices, foreign branch plants, corporate hierarchies, extraterritorial
business law, and even a bit of foreign direct investment and value-added activity’ (Moore and
Lewis, 2000: 31–2).
The vast heterogeneity of this long period, however, leads a majority of scholars to
situate the direct antecedents of the contemporary global corporation within the dynamics
of a two centuries-plus long duration spanning the period prior to the end of World War II in
which the modern nation-state system emerged in ways that allowed invention and social
organization to combine that vastly increased world capital and the wealth of nation states.
Coupled with an extraordinary rise in global population that attended the industrial
revolution, the societies that arose would invent new ways to organize the world itself
through colonialism and imperialism that vastly attenuated their interactions between peoples,
states and regions such that a clearly differentiated era of global interaction can be
said to exist (Harvey,1990). Many of the characteristics of the global corporation that
we examine directly in this chapter date from this period (for example, patterns of
equity ownership, corporate ownership and management of subsidiaries, the relationship
of ‘central’ organizational functions' to supply and distribution chains, etc.) as attributes
of corporate structures in the most prosperous and globally engaged nations (largely through
colonial and imperialist relationships)
As the world emerged from the of World War II, economic recovery and expansion
were led overwhelmingly by American corporations which for a period from the end of the
war until the reentry of Japanese and European corporations onto the global scene essentially
stood for what by then had come to be viewed as multinational corporations(MNCs) (Barnet and
Mueller, 1974). This period from the end of World War II to the present can be viewed, therefore,
as a third and distinct period in the transformation of the global corporation. As the next parts of
this chapter detail, the transformations of the global corporation occurring within this third
period have been far-reaching and distinctive, reflecting changes taking place within the
broader structural dimensions of globalization itself and at the same time significantly
contributing to those continuing changes.
Part Two: How Do Global Corporations Function? What Constitutes a Global Corporation?
The contemporary global corporation is simultaneously and commonly referred to either
as a MNC, a transnational corporation (TNC), an international company or a global company.
While much of the remainder of this chapter will serve to clarify some of these distinctions,
those offered by Iwan (2012) are practically useful.
International companies are importer sand exporters, typically without investment
outside of their home country.
Multinational companies have investment in other countries, but do not have
coordinated product offerings in each country. They are more focused on adapting their
products and services to each individual local market.
Global companies have invested in and are present in many countries. They
typically market their products and services to each individual local market.
Transnational companies are more complex organizations which have invested
in foreign operations, have a central corporate facility but give decision making,
research and development (R&D) and marketing powers to each individual foreign
market.
More formally the TNC has been defined by the United Nations Centre on
Transnational Corporations (UNCTC) as an ‘enterprise that engages in activities which add value
(manufacturing, extraction, services, marketing, etc.) in more than one country (UNCTC, 1991).
This chapter will employ the term 'global corporation’ to refer to all of these types, seeking within
specific contexts to be clear about which usage most applies. As many of the citations employed
below indicate, however, these distinctions are often not employed within the literature.
An understanding of how global corporations operate within contemporary
globalization requires a brief recounting of some of the major changes that have taken place over
the almost 70 years since the end of World War II. As indicated above, US corporations
operating internationally had enormous advantages in the immediate post-war period as they –
virtually alone in the world – emerged from the war with their productive, organization
and distributional capacities intact. What would take shape as the beginning of contemporary
globalization, however, dates from the economic recovery of capital structures in Japan
and Europe and the reentry into global markets of their national corporations. By1974,
Barnet and Mueller in a path-breaking volume could both define the MNC as a major
economic global actor and begin an effective description of how this particular corporate form
was coming to dominate various aspects of global production and exchange (Barnet
and Mueller, 1974). A considerable amount of other scholarly work documents various
‘waves’ of global corporate development through the subsequent six decades to the present.
The overall structure of this system would stay in place and continue to develop
throughout the 1970s and 1980s – a period that stands chronologically just prior to three
fundamental innovations that have substantially changed the character of the global
corporation: the advent and impact of digitalization and instantaneous global communications;
The structural transformation of global commerce from producer-driven commodity chains
to buyer-driven; And the increasing role performed through the global system by financial
elements and the emergence of the global financial firm. The post-war period can be delineated
in a number of ways. Geriffi, for example, emphasizes three structural periods: investment-
based globalization (1950–70); Trade-based globalization (1970–95); digital globalization (1995
onwards).Within this analysis the nature of the global corporation changes accordingly, being
driven in each case by its evolving purposes and by its extended reach and abilities(Geriffi,
2001: 1616–18). Another method of projecting this growth is to examine the sources and
levels of Foreign Direct Investment (FDI) most of which was of corporate origin. As
Hedley indicates, in1900 only European corporations were major investors, to be
joined by some American firms in the 1930s. Citing UN data he dates 1960 as the
principal turning point for FDI as the major driver of extended global corporate
development. In each subsequent decade until the turn of the century, FDI would triple (Hedley,
1999).
Throughout these periods economists, other scholars and government actors at both the
national and transnational level tended to ‘frame’ the progressive growth of the global corporate
structure (again, referred to almost indiscriminately as either MNCs or TNCs) through efforts to
define, measure and assess the extent and consequences of FDI, defined initially and primarily as
the entry of private capital from a source external to a country into a receiving country. Usually
referred to in terms of ‘out-ward’ and ‘in-ward’ flows, supplies of FDI were viewed as the major
elements of global economic development, and during various policy periods as ‘essential’
for the development of what was then viewed as the ‘third’ world, even if in reality the vast
majority of FDI in the 1990swas between countries of the ‘developed’ world – primarily
North America, Europe and Japan. Since 1964 the United Nations Conference on Trade and
Development (UNCTAD) has focused on the various roles that FDI plays in the development
process and has maintained an extensive policy library of global FDI statistics as well as the
dense structure of regulation that frames global etc. corporate cross border engagements
(Fredriksson, 2003). Periods of intense FDI changed the global corporate landscape. During
the period 1985–90 FDI grew at an average rate of 30 per cent a year . One result,
unsurprisingly, was the changing landscape of corporate units and their relationship to
each other. De Anne Julius indicates that the expansion of FDI, intercorporate alliances, and
intrafirm trade during this period reached a level at which ‘a qualitatively different set of linkages’
was created among advanced economies (Julius, 1990). It was estimated that some
20,000new corporate alliances were formed just in the period 1996–8 (Gilpin, 2000: 170).
 The investment-based period was dominated by producer-driven commodity or
value chains, which in turn tended to be dominated by firms characterized by large amounts of
concentrated capital focused on large-scale or capital-intensive manufacturing or extractive
industries. The organization of the dominant global firms during this period was
powerfully influenced by the transformation within national economies of the older
manufacturing companies wrought by what was viewed as the progressive ‘de-
industrialization’ of these economies through wide-scale off-shoring of labour applications
and its related costs. (See, for example, Bluestone and Harrison, 1984.)This progressive
shift in the siting of manufacture transformed the dominant manufacturing firms of
these older developed companies into more fully extended and integrated organizational
forms that moved many such firms from a self-conscious understanding of themselves as
‘national firms operating internationally’ into more authentically global firms that required
extensive corporate integration of their activities throughout the world.
Many corporate structures, especially those in the United States, operating within the frame
of the producer-driven commodity chain had been organized by what came to be recognized as
‘fordist’ management principles. US firms in particular had sought to transport these models
abroad to their international manufacturing holdings. The emergence of Japan as a
major producer nation, especially of automobiles and consumer electronics from the
1970s on, brought onto the scene new models of effective production focused especially
on quality and regimes of flexible production –a move that was echoed within European
firms rejoining the global commodity chains.
These activities were experienced by US firms as unwelcome challenges to their previously
virtually unchallenged positions on product design, production efficiency, and quality – and
ultimately on the ability of these corporate structures to maintain their accustomed returns
on investment. The result was a progressive ‘reinventing’ of the American business model,
especially the industrial model – a challenge that would dominate the curricula of US
business schools for over two decades (Risi, 2005)and which is also continuously associated
with the global value shift from manufacturing capital to finance and human capital in
progressively networking societies(Castells, 2009).
Part Three: What is Different about this Phase of Global Corporate Development?
The so-called ‘developing economies’, and especially those of Brazil, India and
China – the so-called BRICS economies –have become the most dynamic sector of global
corporate growth, represented in part by their significant FDI over three decades.
The relative size, growth and range of activity of global corporations from the
emerging economies suggest that they are on a trajectory that will soon situate them firmly
within those of the historically more developed economies. The number of global corporations
from the emerging market economies listed in the Fortune Global 500, which ranks corporations
by revenue, rose from 47 firms in 2005 to 95 in 2010. These companies have also become active
in the broad pattern of global mergers and acquisitions (M&A), a primary vehicle by
which corporate concentration takes place.
 To cite Ahern: In 2010 these companies accounted for 2,447 acquisitions, or22%
of global M&A transactions, which is up from 661 acquisitions, or9% of total M&A
acquisitions, in 2001. Of the 11,113 M&A deals announced in 2010, 5,623
(50%)involved emerging market companies, either as buyers or as take-over targets of MNCs in
advanced countries.(Ahern, 2011: 23)The fact that the global economic slowdown resulting from
the financial crisis of 2007has had a lesser impact on many developing economies, especially
the BRICS, indicates the extent to which they have become a new and important source of capital
within the global system.
Capital flows in general over the past decade-and-a-half have begun to change
from the dominant north–north/north–south dynamic to one in which south–south and south–
south capital flows are significant (Rajan, 2010) with most of the south–north capital flows
coming from China and India. Examples include China's Lenovo Corporation’s purchase of
IBM's PC business and India's investment in various historically British firms including Jaguar
Land Rover (Economist, 2011). Increased north–south investments during this period
allowed global north corporations to rebound quickly from their profit losses and restore income
growth. The relative robust nature of the emerging economies has continued to attract FDI
and to create conditions leading to the rapid expansion of their nationally based global
corporations (UNCTAD-WIR, 2011:26). The importance of global corporations in Brazil, India
and China to the current and projected global economy is singular. With 40 per cent of the
world's population the BRICS represent a primary force in both global production and
consumption.
Hawksworth and Cookson predict that ‘middle class’ consumers in China and
India will grow from some 1.8billion in 2010 to 3.2 billion in 2020 and 4.9billion by 2030
(Hawksworth and Cookson,2008). The relative import of their global corporate cultures can
be gauged in part by the fact that in 2012 global corporations in China made up 73 of the
largest in the Fortune 500 list (CNN Money, 2012), and whereas Brazil and India with eight a
piece currently account for a small share of such corporations, emergent market countries are
projected to account for a near doubling of their share of world trade over the next 40years,
reaching nearly 70 per cent by 2050(Ahern, 2011). In 1998 only one of the top100 global
corporations was located outside the United States, Europe or Japan (Oatley, 2008).