«The new challenges and opportunities created by the spread of globalization have reshaped both institutional and individual responses to this ...»
Responding to Globalization
The new challenges and opportunities created by the spread of globalization
have reshaped both institutional and individual responses to this
phenomenon. This comprehensive analysis of the way in which governments
and firms have responded to globalization examines closely the options
available to both, and the historical and institutional contexts to the strategic
Responding to Globalization draws together a panel of international
experts in a conceptually rigorous examination of the profound impact of
globalization. Subjects covered include:
• The international monetary system after the euro
• The response of the Japanese software industry to globalization
• The dynamics of globalization strategy in South Korea
• Australian integration into the global economy
• The impact on China and Russia in their move towards a market economy
• Institutional transitions in Yugoslavia and Bulgaria
• Latin American corporate strategies This rigorous survey focuses on political, ideational and economic factors lying behind these responses to globalization. It is essential reading for all those interested in globalization, international business and international political economy.
Aseem Prakash is Assistant Professor, Department of Strategic Management and Public Policy at the School of Business and Public Management; Department of Political Science; The Elliott School of International Affairs, The George Washington University. He is the author of Greening the Firm: The Politics of Corporate Environmentalism and co-editor of both Globalization and Governance and Coping with Globalization.
Jeffrey A.Hart is Professor of Political Science at Indiana University, Bloomington. His publications include The New International Economic Order, Rival Capitalists, Globalization and Governance (co-edited with Aseem Prakash) and Coping with Globalization (co-edited with Aseem Prakash).
Routledge advances in international political economy 1 The future of the nation-state Essays on cultural pluralism and political integration Edited by Sverker Gustavsson and Leif Lewin Co-publication with Nerenius and Santérus Publisher AB, Sweden 2 Classical liberalism and international economic order Studies in theory and intellectual history Razeen Sally 3 Coping with globalization Edited by Aseem Prakash and Jeffrey A.Hart 4 Responding to globalization Edited by Aseem Prakash and Jeffrey A.Hart Responding to Globalization Edited by Aseem Prakash and Jeffrey A.Hart London and New York First published 2000 by Routledge 11 Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004.
© 2000 edited by Aseem Prakash and Jeffrey A.Hart All rights reserved. No part of this book may be reprinted or reproduced or utilised in any formor by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library
ISBN 0-203-46617-9 Master e-book ISBN ISBN 0-203-77441-8 (Adobe eReader Format) ISBN 0-415-22865-4 (Print Edition) To our colleagues at the International Studies Association Contents
8 Mediating globalization and social integration in postCommunist societies: a comparison of Yugoslavia and Bulgaria 235
Marie Anchordoguy, Associate Professor, Henry M.Jackson School of International Studies, University of Washington.
Beverley K.Crawford, Lecturer and Acting Director, Center for German and European Studies, University of California, Berkeley.
Michele Fratianni, W.George Pinnell Professor of Business Economics and Public Policy, Kelley School of Business, Indiana University, Bloomington.
Jeffrey A.Hart, Professor, Department of Political Science, Indiana University, Bloomington.
Chung-in Moon, Professor of Political Science and Diplomacy, Yonsei University, Seoul, South Korea.
Aseem Prakash, Assistant Professor, Department of Strategic Management and Public Policy, School of Business and Public Management; Department of Political Science; and The Elliott School of International Affairs, The George Washington University.
John Ravenhill, Professor, Department of Politics, University of Edinburgh.
Formerly Professor of International Relations in the Research School of Pacific and Asian Studies at the Australian National University.
Fernando Robles, Associate Professor of International Business, The George Washington University.
Steven Solnick, Associate Professor, Department of Political Science, Columbia University.
Fubing Su, Doctoral Student, Department of Political Science, University of Chicago.
Dali L.Yang, Associate Professor of Political Science, Chair, Committee on International Relations, University of Chicago.
Preface Economic globalization—the processes leading to the integration of final products, intermediate goods and factor markets across countries, coupled with the increased salience of cross-border value-chains in international economic flows—has generated much debate about its causes, extent and impact on business and public policy. This volume is the third in a series of three that examines its implications for governance structures across countries and issues areas.
We have been interested in understanding the changing nature of international political economy of which economic globalization is both a cause and a consequence. We began preliminary discussions on this subject in the Spring of 1995 focusing on four key questions: is economic globalization a fad, how best to conceptualize it, how did it originate, and what may be its implications? Subsequently, we added a fifth question: how to cope with globalization? To systematically examine these questions, we organized two joint panels, “Governance Structures for the Twenty-First Century,” at the San Diego convention of the International Studies Association, April 16–20, 1996, a workshop at Indianapolis, Indiana October 12–13, 1996, and another workshop in Alexandria, Virginia July 31–August 1, 1998. Three edited volumes have emerged from these deliberations: the first volume, Globalization and Governance, from the San Diego conference and the Indianapolis workshop; the second and the third volumes, Coping with Globalization and Responding to Globalization, from the Alexandria workshop. These volume are multi-disciplinary, with the authors representing the disciplines of political science, economics, law, international business, and business strategy.
Globalization and Governance focuses on how economic globalization impacts the extant governance institutions at multiple levels of aggregation.
Coping with Globalization seeks to understand how governments and firms can cope with globalization across issue areas. Responding to Globalization examines how different countries have responded to the challenges of increasing levels of global economic integration.
Unlike many other works examining responses to globalization, Responding to Globalization advocates neither resisting it nor embracing it.
At least in the short-run, globalization is not pareto superior: there are “winners” and “losers.” A focus on the strategies adopted by actors to influence the distribution of costs and benefits is crucial to understand the xii Preface political economy of globalization. This volume, therefore, examines how globalization impacts a given actor’s set of opportunities and threats, why actors choose specific strategies, what political, ideational, and economic factors are behind these choices, and how the historical and the institutional contexts impact these decisions.
The bulk of the financial support for the Alexandria workshop was provided by the Center for the Study of Global Change, Indiana University, Bloomington. We received additional support from the School of Law, East Asian Studies Center, Department of Political Science, Center for the Study of International Relations, Center for International Business Education and Research (all Indiana University), The Elliott School of International Affairs, School of Business and Public Management (The George Washington University), and Center for International Business Education and Research (Purdue University). Matthew Krain provided valuable administrative and organizational support.
The following presented papers at the Alexandria workshop: Alfred C.
Aman, Jr., Marie Anchordoguy, Reba A.Carruth, Nazli Choucri (in absentia), Benjamin J.Cohen, Beverly Crawford, Michele Fratianni, Jeffrey A.Hart, Robert T.Kudrle, Stephanie A.Lenway, Chung-in Moon, E.Philip Morgan, Sylvia Ostry, John Ravenhill, Fernando Robles, Alan M.Rugman, Steven Solnick, Debora L.Spar, Steven Weber, and Dali L.Yang. The workshop participants received valuable comments from the following discussants/session chairs: Howard Beales III, Thomas L.Brewer, Nathan Brown, John Daniels, Herbert J.Davis, Bruce Dickson, Harvey B.
Feigenbaum, Kenneth Flamm, Jeffrey A.Hart, Virginia Haufler, Peter J.
Katzenstein, Matthew Krain, D.Jeffrey Lenn, Catherine L.Mann, James R.
Millar, Theodore H.Moran, Susan M.Phillips, Adam S.Posen, Aseem Prakash, Pradeep Rau, John Ravenhill, Scheherazade S.Rehman, Susan Sell, David Steinberg, and Susan J.Tolchin. In particular, we are indebted to Peter J.Katzenstein who carefully read and commented on every paper.
The papers were revised in Fall/Winter 1998. Two book manuscripts, Coping with Globalization and Responding to Globalization, were submitted for review in January 1999. Based on the feedback from the anonymous reviewers, the papers were revised again in Summer 1999 and the revised manuscripts were accepted for publication in August 1999.
As we look back, editing this volume has been a very enriching and intellectually stimulating experience. We thank the authors for bearing with us in terms of repeated revisions and for their intellectual guidance.
This volume is dedicated to our colleagues at the International Studies Association who have inspired us by their stellar research and provided a scholarly environment for the systematic examination of complex international issues.
Aseem Prakash and Jeffrey A.Hart The processes of economic globalization—the increasing integration of input, factor and final product markets across countries coupled with the increasing salience of multinational enterprises’ (MNEs) value-chain networks in international economic flows—are reshaping policy landscapes. This volume examines the strategies of governments and firms to respond to the opportunities and threats created by these processes. The pace, depth and impact of globalization is uneven within and across countries and industries.
Though globalization is neither inexorable nor inevitable, there is sufficient evidence to suggest that it is causing long-term structural changes in the world economy (Hirst and Thompson, 1996; Strange, 1996; Rodrik, 1997;
for an opposing view, Chase-Dunn, 1994). Globalization has both economic and non-economic dimensions, but this volume focuses on the responses to economic globalization only while acknowledging that the non-economic dimensions pose policy challenges for business and public policy.2 Cross-border economic linkages have existed for centuries. The trading exploits of Marco Polo and the sea-based trade between the Indus Valley and the Mesopotamian civilizations are well documented. Based upon indicators such as the ratio of exports to gross domestic product (GDP) and the levels of capital flows, some suggest that cross-national linkages were more salient on the eve of World War I than they are now (Rodrik, 1997).
The Great Depression and World War II reversed such trends. International economic flows picked up in the 1950s, 1960s and 1970s, primarily through expansion in foreign trade. Since the 1980s, the depth and pervasiveness of cross-border economic linkages have accelerated, this time led by the MNEs.
Thus, globalization differs from previous experiences of market integration in terms of the expanded role of the MNEs (Cox, 1993).
One indicator of the MNEs’ key economic role is the rising level of intracompany trade that now exceeds arm’s-length trade ($5.3 trillion versus $4.8 trillion in 1993; UNCTAD, 1996). The value chains created by MNEs now span multiple countries, often in multiple regions of the world, accounting for about 7 percent of world GDP (5 percent in the mid-1980s) and one-third of world exports (about one-quarter in the late 1980s) 2 Aseem Prakash and Jeffrey A.Hart (UNCTAD, 1998). Traditionally, the global presence of MNEs was equated with the aggregate level of foreign direct investment (FDI); the latter surged from $1 trillion in 1987 to $3.5 trillion in 1997 (UNCTAD, 1998). However, the level of FDI incompletely reflects the extent of MNE activities since MNEs can access foreign markets through a variety of alternative routes, such as alliances, joint ventures, and dedicated sub-contractors that do not require transfers of capital across borders. International production by the foreign affiliates of MNEs foreign affiliates currently outweighs worldwide exports as the dominant mode of servicing foreign markets ($9.5 trillion versus $6.4 trillion) in 1997. Understanding the linkages between the occurrence and efficacy of these alternatives to FDI and technological, institutional, structural and cultural factors is an important research area in the study of MNEs.
Is globalization different from internationalization? Milner and Keohane (1996) employ the term “internationalization” to describe the changes generated by reductions in transaction costs that increase the cross-border flows of goods, services and capital. Others, however, distinguish globalization from internationalization, both at the country and firm levels.