AAPL business and iPhone adoption ratesto biological systems, nonlinear geoscience relationships, economics, demography and the list goes on. You are probably wondering why I am talking about some 19th-century Belgian scientist, logistic functions, S-curves and all this jazz. Here is the reason: The S-curve lies at the foundation of what will be one of the largest global macro forces driving markets over the next decade.
The issue of the global concentration of agribusiness is crucial to the future of the food systems of developing and poor, non-developing countries.
These countries have been a target of corporate investments from the outset of the industrial food system. This process has been uneven—at different times corporate investment has focused on one or another part of the food system.
Today, this uneven and often uncoordinated foray of metropolitan corporate capital is still subjugating the agriculture and domestic food markets of many developing countries, particularly smaller, peripheral ones undergoing rapid urbanization, to Yum china internationalization case needs of global agribusiness.
For some of the larger developing countries, however, national capitalists are the principal force behind the emerging urban food system.
In addition, the state has been playing a key role in the consolidation of the urban food system in certain emerging economies.
Foreign participation in the food industry was once typically concentrated in the more sophisticated food segments geared to the emerging urban middle class and to exports, primarily to wealthy countries. Because of lack of patent protection, there was little foreign private capital investment in the genetic inputs industry.
Foreign direct investment was also largely absent until recently from the retail sector. Responses to Decreased Market Growth in Developed Countries A profound shift occurred in the s and s in the patterns and extent of the transnational corporate penetration of the agrifood systems of developing countries.
From the mids, per capita food consumption of basic staples in the developed world was reaching saturation, and overall growth suffered from the effects of Yum china internationalization case end of the baby boom.
This led to a rapid process of concentration and development of oligopolies where a few companies control a large portion of the market as the key condition of continued growth. This slowdown in growth in food purchases in the developed countries was partially offset by a number of new initiatives.
The introduction of an increasing number of unprocessed specific varieties instead of selling undifferentiated commoditiesled to a truly unbelievable proliferation of processed food products, and a segmentation of markets. There was also renewed attention to the potential of the domestic markets of developing countries where higher demographic growth rates and rapid urbanization were creating ideal conditions for food corporations to offset the slowdown in growth in developed country markets.
In earlier periods, Latin American countries were the main focus of investments directed to domestic markets within the periphery.
Now, attention was being redirected to Asia where many developing countries were experiencing sustained high growth rates. During the s, biotechnology, heavily dependent on patents, was revolutionizing the genetic and agrichemical inputs sectors. The seed, fertilizer, and chemical inputs sectors, particularly of those developing countries with an increasingly large-scale and export-oriented agriculture, as in the Southern cone countries of South America, were subject to new waves of market pressure from foreign-based transnationals.
But the input sectors were not the only areas for investment. There was a rapid growth of transnational involvement in the retail food sector of the South, which had been mainly owned and organized on a domestic basis. Some European corporations, particularly Carrefour, had entered developing country markets as early as the s.
However, it was only in the s that a more generalized foreign corporate penetration of the retail sector got under way, first in highly urbanized Latin America and then in key Asian countries. European retail led the way here but was then accompanied by the U.
Urbanization in developing countries also brought with it a shift in lifestyles and food habits favoring the rise of convenience foods, which, in turn, stimulated the expansion and large-scale entrance of foreign corporations into the fast-food sector.
This now includes direct foreign investment in land and water resources, stimulated both by the moves to grow crops for agrofuel feedstocks and by concerns with food security in an increasingly uncertain environment for world commodity trade.
Significant concentration of control of food and agriculture had already occurred in most advanced capitalist countries. In the United States, concentration ratios for the top four or five firms have been calculated for the major upstream inputs materials, resources, energy, fertilizers, etc.
The main segments have ratios averaging well over the 40 percent level—considered the threshold for a market oligopoly—and often in the percent range. More recently, researchers have identified very high levels of concentration in the retail sectors of Europe and the United States.
In addition, a substantial proportion of trade is now organized and coordinated by lead firms. As much as a third of overall trade can be accounted for by purchases between the subsidiaries of the same firm, where prices are determined by fiscal including tax considerations. In smaller market segments, there are even higher levels of concentration involving duopolies and even monopolies.
And, although global food cartels have formed, often in oligopolistic markets, formal collusion is not necessary. Leading firms can adjust their respective behavior, creating an informal control over the market. The issue of market concentration, however, is not limited to individual markets.
The major firms grow both horizontally in like sectors and vertically integrating both downstream suppliers and upstream markets for a given industry —leading to concentration and economic power that extends to broad sections of the agrifood system.
It is this activity across market segments that transforms market concentration into a greater position of strategic economic power.
Global corporate investment in the food industry was initially overwhelmingly within the leading industrialized blocs. While some firms established an international presence as early as the latter half of the nineteenth century, a more across-the-board incursion of foreign direct investment began in the s.
Leading agrifood transnationals are now increasingly geared to a global food commodity market. This has provided opportunities for the expansion of domestic food companies in a few countries.Students taking the International Business Relations field are required to complete four course credits.
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