Bringing the Firm Back In: Multinationals in International Political Economy

Robert Gilpin , The Political Econamy of International Relations ( Princeton, NJ: Princeton University Press, 1987), pp. 10-11.

Susan Strange , States and Markets: An Introduction to IPE (London : Pinter, 1988), p. 18; Roger Tooze 'Perspectives and Theory: A Consumer's Guide ', in Susan Strange (ed.), Paths to International Political Economy (London: Allen and Unwin, 1984), p. 12.

Strange , op. cit, in note 2. Strange has more recently argued that IPE must be looked at from the viewpoint of the MNE because multinationals exercise power and the aim of IPE is to look for sources and effects of power. See Susan Strange , 'An Eclectic Approach', in Craig Murphy and Roger Tooze (eds.), The New International Paditdcal Economy (Boulder, CO: Lynne Rienner 1991), pp. 40-49.

United Nations Center for Transnational Corporations (UNCTC) , Transnational Corporations in World Development (New York: United Nations, 1988), Chapter 1.

For example, the following books cover multinationals in one chapter (Spero devotes two), but pay little attention to MNEs outside these pages: Robert Gill and David Law , The Global Political Economy: Perspectives, Problems and Policies (Baltimore, MD: Johns Hopkins University Press, 1988); Gilpin , op, cit, in note 1; Robert Isaak , International Political Economy: Managing World Economic Change (Englewood Cliffs, NJ: Prentice Hall, 1991); and Joan Spero , The Politics of International Economic Relations 4th ed. ( New York: St. Martins Press, 1990 ). R.D. McKinley and R. Little , Global Problems and World Order (Madison, WI: University of Wisconsin Press , 1986) and Strange, op. cit, note 2. Each explicitly discuss MNEs or foreign direct investment over about 20 pages. I take these books as representative of current IPE texts.

For example, political scientists have historically used the term MNC. Economists tend to use MNE, arguing that all multinationals are enterprises but not all are incorporated. There may also be a regional bias, with American scholars using MNC and British scholars using MNE. UNCTAD and the UNCTC use the term TNC on the grounds that MNE or MNC implies multinational ownership whereas most multinationals are owned by residents of one country, according to Horst Heininger , 'Transnational corporations and the Struggle for the Establishment of a New World Order', in Alice Teichova , Maurice Levy-Leboyer , and Helga Nussbaum (eds.), Multinational Enterprise in Historical Perspective (Cambridge: Cambridge University Press, 1986). The term MNF has been dropped since a multinational may consist of several firms. D.K. Fieldhouse , 'The Multinational: A Critique of a Concept', in Alice Teichova , et. al., op. cit documents the history of the term multinational corporation since its first use in 1960, arguing that the concept has been taken up and misused by a variety of interest groups.

The term new style MNEs is used by John Dunning , Explaining International Production (Boston, MA: Unwin Hyman , 1988), Chapter 13; Sylvia Ostry , Governments and Corporations in a Shrinking World: Trade and Innovation Policies in the United States, Europe, and Japan (New York: Council on Foreign Relations, 1990) refers to them as global corporations.

In both cases page length must make our examination somewhat cursory; interested readers are directed to the bibliographies and summaries cited here and in these readings for more extensive treatments.

See Jeffery Frieden and David Lake (eds.), International Political Economy (New York: St. Martin's Press, 1987); Gill and Law , op. cit, in note 5, Chapters 3-7, 11; Robert Gilpin , 'Three Models of the Future', in C.F. Bergsten and L.B. Krause (eds.), World Politics and International Economics (Washington, D.C. : The Brookings Institution, 1975 ), Chapter 6; Gilpin , op, cit, in note 1, Chapters 2 and 6; Heininger , op. cit, in note 6; Isaak , op. cit, in note 5, Chapter 6: David Leyton-Brown , 'The Roles of the Multinational Enterprise in International Relations' in David Haglund and Michael Hawes (eds.), World Politics, Interdependence and Dependence ( Toronto: Harcourt, Brace, Javanovich , 1990); McKinley and Little , op. cit, in note 5, pp. 97-98, 130-36 and 154; Theodore Moran (ed.), Multinational Corporations: The Political Economy of Foreign Direct Investment, (Lexington, MA.: Lexington Books, 1985), Chapters 1,7, 13; Spero , op. cit, in note 5, Chapters 4, 8; and Strange , op. cit, in note 2, pp. 74-87.

Robert T. Kurdle , 'The Several Faces of the Multinational Corporation: Political Reaction and Policy Response', in W. Ladd Holsti and F. LaMond Tullis (eds.), An International Political Economy (Boulder, CO.: Westview Press, 1985) argues that host countries see the multinational enterprise as having three faces: extension (as an extension of the home country), rival (as a rival to the host country), and resource (as a resource transfer package to the host country). All three of these faces fall within one of the five faces of MNEs of IPE: the obsolescing bargain model. In addition, the extension and rival faces are captured in the sovereignty at bay argument.

See all of the following by Raymond Vemon : 'International Investment and International Trade in the Product Cycle', Quarterly Journal of Economics (Vol. 80, No. 2, May 1966); Sovereignty at Bay (Harmondsworth : Penguin Books, 1971); Storm Over the Multinationals (Cambridge, MA: Harvard University Press, 1977); 'The Product Cycle Hypothesis in the New International Environment', Oxford Bulletin of Economics and Statistics (Vol. 41, No. 4, Nov. 1979); ' Sovereignty at Bay: Ten Years Later', International Organization (Summer 1981), reprinted in Moran , op. cit, in note 9.

See Steven Hymer 'The Multinational Corporation and the Law of Uneven Development', in Jagdish Bhagwati (ed.), Economics and World Order (New York: McMillan, 1971), and 'The International Division of Labour' in R.B. Cohen , N. Felton , J. van Liere and M. Nkosi , (eds)., The Multinational Corporation: A Radical Approach, Papers by Stephen Herbert Hymer ( Cambridge: Cambridge University Press, 1979).

On the differences between problem solving and critical theory see Robert Cox , 'Social Forces: States and World Order', Millennium Journal of International Studies (Vol. 10, No. 2, 1981), pp. 126-55.

Vemon , op. cit, in note 11, 1966.

Vemon , op. cit, in note 11, 1971: pp. 65-112, 1977: 89-101, and 1979 .16. Gilpin , op. cit, in note 9.

Raymond Vernon , op. cit, in note 9, 1981, p. 247.

Vemon , op. cit, in note 11, pp. 231-47.

Vemon , op. cit, in note 17, 1981.

Raymond Vernon and Debra Spar , Beyond Globalism: Remaking American Foreign Economic Policy (New York: Macmillan , 1990), pp. 109-39.

Moran , op. cit, in note 9, p. 274.

Steven J. Kobrin , 'Testing the Bargaining Hypothesis in the Manufacturing Sector in Developing Countries', International Organization (Vol. 41, 1987), p. 610.

Vernon , op. cit, in note 11, 1971: pp. 46-59, and 1977: pp. 151-73. See Chapter 1, the citations in its footnotes and the case studies in Moran , op. cit, in note 9 for a review of the literature to the mid-1980s. See also Barbara Samuels , Managing Risk in Developing Countries (Princeton, NJ: Princeton University Press, 1990) Chapter 1 and the bibliography for an update.

Kobrin , op. cit, in note 22, pp. 634-37.

Moran , op.cit, in note 9, pp. 264-69.

Hymer , op. cit, in note 12, 1971. See also Hymer , op. cit, in note 12, 1979 , and Hugo Radice (ed.), International Firms and Modern Imperialism (London: Penguin, 1975).

The arguments are not developed in detail here. See, for example, Samir Amin , Unequal Development (Hassocks: Harvester, 1976); Rhys Jenkins , TNCs and Uneven Development : The Internationalization of Capital and the Third World (London: Methuen, 1987), and Richard Newfarmer (ed.), Profits, Progress and Poverty ( Notre Dame: University of Notre Dame Press, 1985).

Cox , op.cit, in note 13; see also Robert Cox , Production, Power and World Order: Social Forces in the Making of History ( New York: Columbia University Press, 1987).

See James Caporaso (ed.), A Changing International Division of Labour (Boulder, CO : Lynne Reiner Publishers), Chapter 1, for a theoretical overview of the literature on the international division of labour. Mark Casson , Multinationals and World Trade: Vertical Integration and the Division of Labour in World Industries (London : Allen and Unwin, 1986), Chapter 2, relates this literature to the economic theory of the vertically integrated MNE.

See Folker Froebel , Jurgen Heinrichs and Otto Kreye , 'The World Market for Labour and the World Market for Industrial Sites', Journal of Economic Issues (Vol. 12, No. 4, 1978), pp. 843-858 ; Kurt Hoffman and Raphael KapLinsky , Driving Force: The Global Restructuring of Technology, Labour and Investment in the Automobile and Components Industries (Boulder, CO: Westview Press, 1988).

Hymer , op. cit, in note 12, 1979.

John Dunning , 'The Globalization of Firms and the Competitiveness of Countries', in John Dunning , Bruce Kogut and Magnus Blomstrom (eds.), Globalization of Firms and Competitiveness of Nations (Crafoord Lectures, Lund: Lund University Institute of Economic Research, 1990).

For example, Hymer's early work on the oligopolistic advantages of MNEs that allow them to cover the costs of foreignness in going abroad is a key component of the OLI paradigm outlined below. However, his later neomarxist writings are not discussed. Dependencia views are almost totally ignored.

For example, Gill and Law, op. cit., in note 5, and Strange, op. cit., in note 4.

Charles Kindleberger , American Business Abroad: Six Lectures on Direct Investment ( New Haven, CT: Yale University Press, 1969). See Alfred Chandler : 'Technological and Organizational Underpinnings of Modern Industrial Multinational Enterprise: The Dynamics of Competitive Advantage', in Alice Teichova et al., op. cit , in note 6, and Scale and Scope: The Dynamics of Industrial Capitalism ( Harvard: Belknap Press of Harvard University, 1990). The early work on the MNE as an actor was developed in Stephen Hymer's 1960 Doctoral dissertation, written under Charles Kindleberger. See Hymer , The International Operations of National Firms: A Study of Direct Investment (Ph.D. Thesis, MIT; published by MIT Press under the same title in 1976). Their works on oligopolistic motives for FDI are now known in IBS as the Hymer-Kindleberger approach.

Kindleberger , op. cit, in note 35, 1969; Charles Kindleberger , ed. The International Corporation (Cambridge, Mass.: MIT Press, 1970); Richard Caves , Multinational Enterprise and Economic Analysis (Cambridge, U.K.: Cambridge University Press, 1982).

Good summaries of the various theories can be found in John Cantwell , 'A Survey of Theories of International Production' ( Mimeo: University of Reading Department of Economics, 1990), and Dunning , op. cit, in note 7, Chapters 1,2 and 12, For a short summary see John Dunning , 'The Theory of International Production', in Khosrow Fatemi (ed-), International Trade: Existing Problems and Prospective Solutions (New York: Taylor and Francis , 1989).

There are many references but several of the best known are gathered together in Dunning , op. cit, in note 7. See also Dunning , op. cit, in note 37 for a concise summary of the development of the OLI model; John Dunning , 'The Study of International Business: A Plea for a More Interdisciplinary Approach', Journal of International Business Studies (Fall, 1989), pp. 411-36 for current directions in IBS; Dunning, op.cit, in note 325 on globalisation, MNEs and competitiveness; Casson, op. cit., in note 29; Mark Casson , The Firm and the Market: Studies in Multinational Enterprise and the Scope of the Firm (Oxford: Basil Blackwell and Cambridge , Mass: MIT Press , 1987); and Cantwell, op. cit., in note 37.

Cantwell , op. cit, in note 37, argues that the eclectic paradigm can be analyzed at the macro (economy), meso (industry) or micro (firm) level. Dunning , op. cit, in note 37, pp. 68-69 shows how these advantages can vary at each level. For an application of this model to the pharmaceutical industry see Lorraine Eden , 'Pharmaceuticals in Canada: An Analysis of the Compulsory Licensing Debate', in Alan Rugman (ed.). International Business in Canada: Strategies for Management (Toronto: Prentice Hall, 1989).

Farok Contractor and Peter Lorange , Cooperative Strategies in International Business (Lexington, Mass:Lexington Books, 1988) and Charles Oman , New Forms of Investment in Developing Countries: Mining, Petrochemicals, Automobiles, Textiles, Food (Paris: Development Centre of the OECD, 1990) document the growing nonequity linkages among MNEs. Charles Kindleberger , 'The "New" Multinationalization of Business', ASEAN Economic Bulletin (November 1988), pp. 113-24, argues, however, that many of these so-called 'new forms of international business' are not new (e.g., joint ventures) and may not be efficiency based.

On international competitiveness strategies see Michael Porter : The Competitive Advantage of Nations (New York: The Free Press, 1990a), and 'The Competitive Advantage of Nations'. Harvard Business Review (March-April, 1990b), pp. 73-93; Ostry , op. cit, in note 7; Alan Rugman and Alain Verbeke , Global Corporate Strategy and Trade Policy (London and New York: Routledge, 1990).

See Lorraine Eden , 'Multinational Responses to Trade and Technology Changes: Implications for Canada', in Don McFetridge (ed.), Foreign Investment, Technology and Growth (Ottawa: Investment Canada, 1991); Unctc , op. cit., in note 4; and Rob van Tulder and Gerd Junne , European Multinationals in Core Technologies (New York: John Wiley, 1988) on information technology and its potential impacts on MNE organisational and locational structures.

Eden , op. cit, in note 42; Unctc , op. cit, in note 4; Van Tulder and Junne , op. cit, in note 56.

Dunning , op. cit, in note 7, p. 327.

C.K. Prahalad and Gary Hamel , 'The Core Competence of the Corporation ', Harvard Business Revfew (May-June 1990 ), pp. 78-91.

See Ian Giddy and Stephen Young , 'Conventional Theory and Unconventional Multinationals: Do New Forms of Multinational Enterprise Require New Theories?' in Alan Rugman (ed.) New Theories of the Multinational Enterprise (London: Croom Helm, 1982), pp. 55-78, on the ownership advantages of 'nonconventional' MNEs. They argue that multinationals from LDCs and small countries tend to rely more heavily on nonequity joint ventures, do not have innovation based advantages, and tend to be imitators, fast followers or niche players. See also Oman, op. cit., in note 40.

The key work initiating this study is Porter , op. cit., in note 55, 1990a. A much shorter and more readable summary can be found in Porter , op. cit, in note 41, 1990 b. Porter argues that home states can generate sustainable competitive advantages in domestic firms by encouraging the development of a domestic competitiveness diamond. This diamond has four points: (1) factor conditions, (2) related and supporting industries, (3) demand conditions, and (4) firm strategy and industry structure.

At a micro level, David Teece , 'Profiting from Technological Innovation ', in David Teece (ed.) The Competitive Challenge: Strategies for Industrial Innovaiion and Renewal (Cambridge, Mass.: Ballinger Publishing , 1987), pp. 185-219, is most useful in identifying the roles of the initial innovator, the fast followers and the owners of specialised and co-specialised assets. At a macro level, John Cantwell , Technological Innovation and Multinational Corporations (Oxford: Basil Blackwell, 1989), and Cantwell , op. cit, in note 37, develop a model of the MNE and technological competence.

Mark Casson , Enterprise and Competitiveness: A Systems View of International Business (Oxford: Clarendon Press, 1990) examines the economic and cultural determinants of firm performance, arguing that culture-specific transactions costs explain most performance differences. He examines the roles of the entrepreneur as a risk taker, problem solver and global scanner. Determinants of entrepreneurial culture are discussed, applied in case studies of the United States and Japan, and then extended to examine joint ventures and the impacts of MNEs on LDCs.

This last issue has caused some considerable internal debate among the British IBS scholars. See the summary in Cantwell, op. cit., in note 37.

Dunning, op. cit., in note 32, p. 60, calls these intemalisation advantages arising from structural market failure.

Cantwell , op. cit, in note 37, p.13; Alan Rugman , Don Lecraw and Lawrence Booth , International Business: Firm and Environment ( Toronto: McGraw Hill, 1985), pp. 104-108.

Francois Chesnais , 'Multinational Enterprises and the International Diffusion of Technology', in Giovanni Dosi et al.(eds.), Technical Change and Economic Theory (London and New York: Pinter Publishers, 1988).

Contractor and Lorange , op. cit, in note 40, 1988.

Markets versus hierarchies theory, referred to as the new institutional economics, was recently linked to IPE in Beth Yarbrough and Robert Yarbrough , 'International Institutions and the New Economics of Organization', International Organization (Vol. 44, No. 2, Spring 1990), pp. 235-59. For an application of the theory of governance to international regimes see Lorraine Eden and Fen Hampson , 'Clubs are Trumps: Towards a Taxonomy of International Regimes', CITIPS Working Paper 90-02 (Ottawa : Carleton University, 1990). It is interesting that the IPE literature sets up its polar cases as states versus markets, whereas the IBS literature uses markets versus hierarchies. In both sets of literature markets are the alternative to the primary unit of analysis.

Erin Anderson and Hubert Gatignon , 'Modes of Foreign Entry: A Transactions Cost Analysis', Journal of International Business Studies (Vol. 17, No.3, 1986), pp. 1-26.

Oman , op. cit, in note 40.

Freidrich Schneider and Bruno Frey , 'Economic and Political Determinants of Foreign Direct Investment', World Development (Vol. 13, No.2, 1985), pp. 161-75. Dunning , op. cit, in note 7, divides locational advantages into environmental, systemic and policy factors. While the interpretations are somewhat similar, the triad of economic, social and political factors is easier to differentiate.

Dunning, op. cit., in note 32.

Dunning, op. cit., in note 7 contains approximately 40 pages on the state and state policies. Just as the major IPE textbooks pay insufficient attention to the MNE, so do the major MNE textbooks provide too little study of the state. One recent exception is a new book on government-business relations by Jack Behrman and Robert Grosse , International Business and Government: Issues and Institutions ( Columbia, South Carolina: University of South Carolina Press, 1990).

Ostry, op, cit., in note 7.

Rugman and Verbeke, op. cit., in note 41.

See by Michael Porter , Competitive Strategy (New York: The Free Press, 1980), Competitive Advantage (New York: The Free Press, 1985); Porter (ed). Competition in Global Industries ( Cambridge, Mass.: Harvard Business School Press, 1986); and Porter , 'Changing Patterns of International Competition' in David Teece (ed.), The Competitive Challenge: Strategies for Industrial Innovation and Renewal (Cambridge, Mass: Ballinger Publishing Co., 1987). See also Yves Doz , Strategic Management in Multinational Enterprises (Oxford: Pergamon Press, 1986); Christopher Bartlett and Sumantra Ghoshal , Managing Across Borders (Boston: Harvard Business School Press, 1989).

Porter , op. cit, in note 63, 1986, pp. 46-49.

Doz , op. cit, in note 63; Anant Negandhi and Arun Savara (eds.), International Strategic Management (Lexington, Mass: Lexington Books, 1989).

Mark Casson , 'Transactions Costs and the Theory of the Multinational Enterprise ', in Alan Rugman (ed.), New Theories of the Multinational Enterprise (London and Canberra: Croom Helm, 1982); Porter , op. cit, in note 63, 1986 ; Nigel Grimwade , International Trade: New Patterns of Trade, Production and Investment (London and New York: Routledge, 1989).

Lorraine Eden , 'The Microeconomics of Transfer Pricing', in Alan Rugman and Lorraine Eden (eds.), Multinationals and Transfer Pricing Management ( London and New York: Croom Helm and St. Martins Press, 1985).

Stefan H. Robock and Kenneth Simmonds , International Business and Multinational Enterprises (Homewood and Boston: Irwin, 1989), p. 253.

Business International , Organizing for International Competitiveness: How Successful Corporations Structure Their World Wide Operations (New York: Business International, 1988) identifies seven generic types: (1) the international division where one unit within the MNE is responsible for all international operations; (2) worldwide regional where the MNE's affiliates are divided into regional divisions; (3) national subsidiaries where each host country constitutes a division; (4) worldwide product divisions where the MNE is organized into several domestic businesses each of which is responsible for its own worldwide operations; (5) worldwide functional divisions based on major functions, e.g., administration, manufacturing, research and development; (6) matrix structures that focus on two characteristics (product, function, region), providing a dual chain of command; and (7) mixed where the MNE combines two or more of the above structures. Business International concludes that the mixed and matrix structures, due to their synergistic properties, are likely to dominate MNE organisational structures in the 1990s. See also OECD , Recent Trends in International Direct Investment (Geneva: OECD, 1987).

Peter F. Drucker , 'The Coming of the New Organization', Harvard Business Review (Jan.-Feb. 1988), pp. 45-63.

Grimwade , op. cit-, in note 66, pp. 143-215.

For more discussion of these locational strategies in the context of technology and trade policy changes facing US multinationals with Canadian affiliates, see Eden, op. cit., in note 42. This paper adds an additional locational strategy (the world product mandate) which is not considered here due to its specific Canadian context.

Gary Gereffi , in 'International Subcontracting and Global Capitalism: Reshaping the Pacific Rim', presented at the PEWS conference on Pacific-Asia and the Future of the World System , University of Hawaii at Manoa, March 28-30, 1991, refers to offshores as 'export processors' and source factories as 'component suppliers', pp. 5-8.

Kasra Ferdows , 'Mapping International Factory Networks', in Kasra Ferdows (ed.), Managing International Manufacturing (Amsterdam: North Holland, 1989).

Doz , op. cit, in note 63.

Lynne K. Mytelka , 'Knowledge-Intensive Production and the Changing Intemationalizatio n Strategies of Multinational Firms', in James Caporaso (ed.), A Changing International Division of Labour (Boulder, CO: Lynne Reinner).

Doz , op. cit, in note 63, Ch.6; Investment Canada, 'The Business Implications of Globalization', Investment Canada Working Paper Series, No. 1990-V.(Ottawa: Government of Canada. 1990); UNCTC, op. cit., in note 4, Part I.

Asim Erdlick (ed.), Multinationals as Mutual Invaders: Intra-industry Direct Foreign Investment ( New York: St. Martins Press, 1985 ), Grimwade , op. cit, in note 66, Ch.1; Investment Canada, op. cit., in note 77; Oecd , Structure and Organization of Multinationals (Geneva: OECD, 1987); Unctc , op. cit, in note 4.

Investment Canada , 'International Investment: Canadian Developments in a Global Context', Investment Canada Working Paper 1990-VI (Updated) (Ottawa: Investment Canada, 1991), Oecd , op. cit, in note 78; UNCTC, op. cit., note 4.

Dunning , op. cit, in note 7, p. 328.

Dunning , op. cit, in note 32, pp. 24-25; Grimwade , op. cit, in note 66.

Vemon , op. cit, in note 11, 1977 and 1979.

The link to Porter's (op. cit., in note 41, 1990a,b) diamond of competitive advantage may provide a clue; i.e. sophisticated consumers and strong competitive rival firms in the home country can generate an explosion of new products. Thus, as Porter argues individual countries may have a comparative advantage in particular industries such as Northern Italy in textiles. See also Erdlick, op. cit., in note 78.

Mytelka , op. cit, in note 76.

Vernon and Spar , op. cit, in note 20.

Helen Milner , Resisting Protectionism; Global Industries and the Politics of International Trade (Princeton, NJ : Princeton University Press, 1988 ); Helen Milner and David Yoffie , 'Between Free Trade and Protectionism: Strategic Trade and a Theory of Corporate Trade Demands ', International Organization (Vol. 43, No. 2, Spring 1989), pp. 239-72. One obvious example of this change is the Exon- Florio amendment which requires the Committee on Foreign Investment in the United States (CFIUS) to review large inward FDI projects for their national security effects- The CFIUS has been around for some time, but that its functions have been and are likely to be increased, partly to monitor Japanese takeovers of US firms. Another interesting question arises as to whether Japanese and European states will attempt to apply extraterritoriality to affiliates in the United States.

Benjamin Cohen , 'The Political Economy of International Trade ', International Organization (Vol. 44, No. 2, Spring 1990), pp. 261-81; Ostry , op. cit, in note 7; David Richardson , 'The Political Economy of Strategic Trade Policy', International Organization (Vol. 44, No.1, Winter, 1990), p. 107-35.

Milner and Yoffie , op. cit, in note 108.

Eden and Hampson , op. cit, in note 70.

Gerd Junne , 'Automation in the North: Consequences for Developing Countries Exports ', in Caporaso (ed.), op. cit, in note 29.

Samuels , op. cit, in note 28. Some optimism may be provided by Ferdows , op. cit, in note 74 who argues that as subsidiaries mature they tend to adopt more technologically sophisticated functions within the MNE; e.g., offshores moving up to source factories. This is already happening in the Mexican maquiladoras where the old plants (offshores) tend to be simple, female dominated and labour intensive operations (e.g., in textiles) while the new plants (source factories) are more technology and capital intensive and operate with a higher proportion of male workers (e.g., in autos and advanced electronics assembly). See Gary Gereffi , Mexico's Maquiladoras Industries: What Is their Contribution to National Development and Transnational Integration in North America?', presented at the conference Facing North/Facing South: A Multidisciplinary Conference on Canadian-US-Mexican Relations, University of Calgary, May 2-4, 1991.

Oman , op. cit, in note 40.

Magnus Blomstrom , Transnational Corporations and Manufacturing Exports from Developing Countries (New York: United Nations, 1990); UNCTC , op. cit, in note 4. Joel Migdal's recent book Strong Societies and Weak States: State-Society Relations and State Capacities in the Third World (Princeton: Princeton University Press, 1988), however, documents the difficulties governments in the Third World face in mobilising their resources for development purposes.

Junne , op. cit, in note 90; James Womack , Daniel Jones and Daniel Roos , The Machine that Changed the World (New York: Rawson Associates, 1990. Locational advantages can be increased through technological upgrading and/or trade linkages. For example, Womack et. al., see small sized auto plants moving to Mexico in response to a North American Free Trade Agreement. See also Eden, op. cit., in note 42.

Lavalin, a Canadian engineering MNE, in the mid-1980s shifted its drafting work from Canada to India where unit labour costs were lower. With the introduction of CAD-CAM in Canada, the MNE recently shifted the drafting work back to Canada. This example demonstrates the importance of technological infrastructure for both manufacturing and services in developing countries.

Peter Evans , Dietrich Rueschemeyer and Theda Skocpol , 'On the Road to a More Adequate Understanding of the State', in Evans et al.(eds.), Bringing the State Back In ( Cambridge: Cambridge University Press, 1985), p. 363.