Geography Reference
In-Depth Information
whereas in today's increasingly open global economy, this concept of
geography is totally inappropriate. MNE headquarter decision-makers
obviously consider countries as locational options. However, nowadays
they also explicitly consider different cities and city-regions both within
countries and between countries as key locational spaces for their loca-
tional choice options. As such, the importance of L very much operates
at the sub-national regional level. At the same time the importance of L is
also very important at the super-national cross-border level. For all types
of MNE establishments, the empirical evidence suggests that the spatial
patterns MNE establishments are generally designed to be in specific sub-
national regions, places which serve super-regional cross-border markets
rather than either national or global markets per se. These super-regional
markets comprise groups of adjacent countries which are undergoing eco-
nomic integration, and the locations from which these integrating super-
regional markets are served are nowadays often described as being 'global
cities' or global city-regions. However, as we saw in Chapter 7 the key
features of these global cities are not simply scale-agglomeration advan-
tages of a form familiar to the classical authors writing over a century ago
on the economics of cities. Rather the key feature of these global cities is
that of the city's connectivity in terms of its global knowledge inflows and
outflows. Indeed, in rich countries the most productive cities are not the
largest cities but those which display the highest levels of connectivity in
the global economy, and particularly knowledge flows mediated by multi-
national firms. The geography of multinational firms increasingly mirrors
the global urban hierarchy, and vice versa. As such, the 'correspondence
principle' arguments of Hymer (1972) have been proved to be prophetic,
while the original urban economic arguments of Vernon (1960) are also to
some extent still pertinent. In contrast, while the original insights of clas-
sical authors (Marshall 1890; Weber 1909) writing about agglomeration
advantages still operate in many developing or transition countries, the
rich country experience of globalization, multinationals and productiv-
ity is a very different story from the standard urban economics textbook
description.
The globalization experience of developing countries nowadays depends
critically on the modern technology transfer activities of multinationals,
and these transfer activities depend on the two-way knowledge flows
between MNE affiliated and the regions in which they are located, and in
turn these flows depend on the two-way relationships between the MNE
affiliates and their headquarter locations. In Chapter 8 we saw that the
role of multinational affiliates has been increasing globally. In particular,
the R&D and innovation generation roles of MNE affiliates are increas-
ing in both the developed and developing economies, exactly as would be
