The Competitiveness of Nations in a Global Knowledge-Based Economy
Peter Dicken
Global-Local Tensions: Firms and States in the Global
Space-Economy
page 3
Content
Abstract
Introduction
An Analytical Point of Entry: Production Chains and
Relational Networks
Firm-Firm Competition: The Changing World of the
Transnational Corporation
State-State Interaction: The Emergence of the
“Competition State”
Firm-State Interactions: Dynamic Bargaining
Relationships
Conclusion: The Global-Local, Debate
Revisited
Conclusion:
The Global-Local, Debate Revisited
The thread running throughout this paper has been the
fact that, within a
121
volatile competitive environment, both firms and states
as competitive institutions are subject to fundamental global-local tensions.
But precisely what is meant by
“global” and “local” is itself problematical and has different meanings for
firms and states. To the firm, the
global-local tension is expressed as the question of whether to “globalize” or
to “localize” or whether to strive to combine the two in a stance of “global
localization.” In this case,
“local” generally means “national”; the issues are those of the autonomy and
responsiveness of national components of the international firm. From the nation-state perspective, the
global-local problematic means something rather different. The pressures toward certain kinds of
putative supranational organization at one extreme are counterpoised against a
pressure toward greater degrees of local political autonomy at the other. The current debates within the European
Community around the issue of “subsidiarity” are a reflection of this, as are
the growing demands of “local states” for greater independence. But it is the interaction between
international firms and nation-states that gives the global-local problematic a
particular twist. To the
international firm, the division of the global political map along nation-state
boundaries, with the extent of market and factor differentiation this implies,
constitutes the major pressure to be sensitive to local differences even while
pursuing a global strategy. To the
nation-state, the international firm is one of the major channels through which
globalizing forces are directed.
The relationship between TNCs and states (at whatever
level) is, self-evidently, a power relationship. There is little doubt that, in general
terms, the relative power of TNCs and states has shifted, but the position is
far less straightforward than has often been supposed. In view of the complexity and degree of
contingency of the bargaining process, it is difficult to make broad
generalizations about the relative “balance of power” between TNCs and states.
There is no doubt that in some
areas, most notably that of financial policy, states have become increasingly
less able to determine, with impunity, such things as the external value of
their currencies. The development
of a global financial system, facilitated by electronic trading mechanisms, has
vastly increased the exposure of state financial policies to external
speculative forces (as the experience of the European Monetary System in 1992-93
showed very clearly. Some very
unwise generalizations have been made over the years, however, which have been
used to write the premature obituary of the nation-state. In contrast, Gordon (1988), for example,
asserts that “TNCs are neither all-powerful nor fully equipped to shape a new
world economy by themselves” (p. 64). Other radical writers (e.g., Picciotto
1991; Pitelis 1991) adopt a similar position. Stopford and Strange’s view is
that
governments as a group have indeed lost bargaining power
to the multinationals. Intensifying
competition among states seems to have been a more important force for weakening
their bargaining power than have the changes in global competition among firms.
This is not to deny that
governments can maintain considerable power in their dealings with any one
foreign firm. The reasons lie in
the competition for world market shares. It seems to us that the changes in the
production structure have altered the relative importance of those factors over
which states had most control, as compared with those over which firms had most
control … [however] does it follow that firms as a group have increased their
bargaining power over the factors of production? Here, the argument becomes complex, for
the power of the individual firm may be regarded as having also fallen as
competition has intensified. New
entrants have altered the rules and offer governments new bargaining advantage.
One needs to separate the power to
influence general policy, from the power to insist on specific bargains.
(Stopford and Strange 1991, 215-16, emphasis added)
It is this issue of the “specific bargain” that is most
relevant to the question of what the processes discussed in this paper mean for
the “really seriously local,” the local community or region currently
being
buffeted by the stormy seas of global economic change.
The problem facing the local
community, in the global scheme of things, is that it is relatively powerless
except in very specific circumstances (for example, where it possesses a unique
or scarce resource that gives it some leverage). The idea that the transformations that
are occurring in the organization of production systems (notably the growth of
network organizations and relationships) will automatically lead to a general enhancement of local economic
opportunity and well-being is a pipe dream.
The evidence that changes in customer-supplier relations
(both inside and outside the firm) will lead to greater local integration is
mixed, even within the automobile industry, on which most attention has been
focused. As McGrath and Hoole
(1992) show, global sourcing is far from dead. It is certainly true that
customer-supplier relationships do involve a greater emphasis on long-term,
closer relationships based upon a high level of mutual trust and that this may
be facilitated by geographical proximity. Firms are, however, increasingly
operating an upper tier of preferred suppliers that are closely integrated at
all stages of the production process, from design to final production. For any one firm, such preferred
suppliers are relatively few in number and unevenly distributed geographically.
Not every local economy, therefore,
can hope to participate in the new integrated networks (Amin 1992; Arnin and
Malrnberg 1992; Dicken, Forsgren, and Malmberg, forthcoming; Schoenberger 1991).
As Schoenberger has perceptively
argued, only some places will benefit from “localization” processes involving
TNCs that arise from new forms of production organization:
First, the most likely scenario is that a smaller number
of places will become the hosts to more integrated multinational corporate
investments. For these favored
places, the prognosis is relatively good as the high level of integration will
yield a more diverse and qualified occupational structure. Moreover, the stability of the
investment, implicating as it does multiple linked firms, is likely to be
significantly higher. Yet, while
many local firms will no doubt be drawn into the production complex, it is
perhaps less likely that they will become core members of the collaborative
partnership, remaining rather in a subordinate position to it. Secondly, as these investments become
more concentrated in particular regions, the excluded regions are likely to
become that much more excluded. Rather than a general embracing of more
and more territory into the productive orbit of multinational networks, the
degree of geographical differentiation will tend to increase. (Schoenberger
1991, 21-22)
Ultimately, therefore, it may be that, because of the
immense asymmetry of power between TNCs and local institutions, there is little
that such institutions can do on their own other than to provide an attractive
business environment or to attempt to stimulate the kinds of local businesses
that might eventually be embedded in a TNC network. Although much depends on the extent to
which a national political system is centralized or decentralized, virtually all
effective bargaining power lies not at the local level but at the national level
or, in cases like the European Community, at a supranational level. To that degree, therefore, the prospects
of local economies will be influenced as much, if not more, by national policies
as by local actions. Within the
global-local nexus, the key interactions, in a power sense, remain at the level
of the TNC and the nation-state; in that respect, the “seriously local” is a
serious problem whose solution requires a broader policy
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