Geography Reference
In-Depth Information
These localization observations appear to be fundamentally at odds with
the 'flat world' argument, the assumptions of which suggest that the insti-
tutional and organizational changes ought to allow businesses in general,
and MNEs in particular, to increasingly outsource and offshore activities
to other lower wage countries. According to the 'flat world' thesis, the
resulting changes in the geographical patterns of foreign investment
should lead to a greater geographical dispersion, not a greater localization,
of MNE operations. However, the reason that we do not see such a simple
or straightforward process of dispersion is that, as we saw in Chapter 5,
the nature of the technological changes which have taken place over recent
years have often been misunderstood. In economic geography terms, our
discussions in Chapters 4 and 5 on both the highly uneven distribution of
key knowledge-related inputs for the production of wealth across space,
combined with our observations of rising spatial transactions costs for
knowledge-related activities, lead to the emergence of new types of link-
ages between the role of specific city-regions as sources of knowledge, and
MNE location behaviour. It is these relationships between certain types
of city-regions and the location behaviour of modern multinational firms
that we now turn to in the next chapter.
NOTES
1.
European international trade in current values grew at 4.1 per cent a year in the period
1870‒1913, as compared to 16.1 per cent a year in the period 1830‒1870 (Bairoch 1976,
p. 77, cited in Daudin et al. 2008).
2.
Similarly, the ratio of world trade to GDP had fallen to 9 per cent by 1938, then rising to
27 per cent by 1992 (Taylor and Aranya 2008).
3.
As pointed out by Dicken et al. (1997), the study of Japanese investment in the Western
economies, and particularly in Europe, has suffered two major shortcomings: first,
Japanese investment abroad has had a much longer history than that usually recognized
by the literature; second, the bulk of the studies are concentrated on manufacturing FDI,
with a serious underestimation of Japanese FDI in various service industries.
4.
Data refer to July 2008. See http://www.wto.org/.
5.
The APEC Region Trade and Investment 2008.
6.
The sensitivity of international M&As to global business confidence may be increased
further by the fact that private equity funds are now playing a growing role in interna-
tional M&As, accounting for just under 18 per cent of the total by value (UNCTAD
2007). Traditionally, private equity investments have tended to resemble shorter
time-span portfolio investments with a focus on higher risk, higher yield opportunities
(UNCTAD 2006). The long-term effects of these changes in international FDI are hard
to gauge. If the increasing role of private equity leads to shorter foreign investments time
spans, this may increase the sensitivity and volatility of FDI to changes in global business
confidence. On the other hand, private equity may allow for a more diversified range of
foreign investments to be developed, thereby providing new growth opportunities for
some markets.
