Geography Reference
In-Depth Information
by increased mutual trading linkages and also by major flows of foreign
direct investment between the two countries. The close economic integra-
tion engendered by these two-way flows of FDI meant that each country
traditionally acted as an incubator for the industrial innovations devel-
oped in the other (Casson and McCann 1999). Yet, although the link-
ages between Britain and the US are critical for understanding modern
globalization, during the nineteenth century Great Britain was the world's
largest exporter of FDI capital in general (Jones 1996), and for most of
the century the pattern of trade between the United States and Britain
largely reflected the global trading patterns which were internal to the
British colonial system. Raw material imports to the United Kingdom
- such as cotton - were exchanged for industrial exports to the United
States. As the US economy grew, however, its trading relationships with
Britain began to change, and by the mid nineteenth century many of the
technical and financial innovations of the British industrial revolution
had been imported into the United States. These imports took place both
by the straightforward imitation of British innovations in areas such as
accounting practices and the formation of stock exchanges (Kaplan and
Johnson 1987), and by the direct implementation of British techniques
and industrial practise via British foreign direct investment in the United
States (Casson and McCann 1999).
The American adoption and adaptation of many of these British
industrial innovations was initially concentrated primarily in the north-
eastern states, and the resulting productive capacity in no small measure
contributed to the eventual outcome of the US Civil War. Yet American
industry was also beginning to exhibit its own distinct character, based on
a series of domestic industrial innovations. As such, an important marker
in the emergence of modern multinational business is 1851, the year of
the Crystal Palace exhibition in London. Following the Crystal Palace
exhibition, the system of manufacturing arms on the basis of standardized
interchangeable parts was the first American production innovation with
a major influence in Britain (Best 1990, 1998). The subsequent American
civil war economy, which required large-scale munitions production, not
only encouraged the widespread adoption of these principles but also led
to many further technical innovations within American industry. The two-
way flow of ideas and innovations between British and American industry
increased during the middle years of the nineteenth century. However,
the British industry, which was based primarily on craft-based principles
of production in which workers were paid according to skills rather than
to the nature of the activity, would progressively become the imitator of
American innovations during the second half of the nineteenth and early
twentieth century (Hounshell 1984). As a result, the flow of ideas and
