Geography Reference
In-Depth Information
As we have already seen, in the modern era of globalization the cross-
border transmission mechanisms mediated overwhelmingly via multina-
tional enterprises are more rapid and powerful than ever. This also implies
that coordinated multinational institutional reforms are required both to
maximize the advantages of globalization and also to limit its adverse con-
sequences. Indeed, the 2008 global financial crisis and its aftermath have
clearly demonstrated the need for multinational coordination of policy
between countries (Roubini and Mihm 2010). Smaller numbers of larger
countries facilitate multi-lateral policy coordination because the number
of governments which are required to agree to a particular policy response
is reduced. In contrast, greater numbers of smaller countries imply a frag-
mentation of financial firepower and greater policy-coordination possi-
bilities (Roubini and Mihm 2010). As we have seen in this topic, in today's
global marketplace, multinational firms are increasingly independent of
any individual countries, and the need to ensure that the benefits of glo-
balization are dispersed to as many parts of the world as possible there-
fore requires both a greater and more nuanced pooling of multinational
sovereignty. Ironically, therefore, from a global system-wide perspective,
increased openness in many ways reduces the benefits of greater numbers
of small countries, unless national smallness is also associated with the
pooling of sovereignty, exactly as is the case with the European Union.
These same global-local tensions faced by nation states are also inher-
ent in all of the investment and location decisions made by modern (and
largely-stateless) MNEs. In many ways the global-local challenges faced
today by both MNEs and nation-states somewhat mirror one another, as
they did in earlier eras. However, the difference today is that their interests
are largely decoupled from one another in a manner which previously
was not the case. As Chapters 6 and 7 have demonstrated, the nature and
role of the nation state has evolved continuously over the four centuries
of globalization, as have the relationships between nation states, regions,
and the multinational enterprises which have emerged from them or
locate in them. In the past their interests tended to be much more closely
aligned, whereas today their interests may often largely diverge. Nations
and regions benefit greatly from the presence of MNEs as they provide
the connectivity which is essential in today's global economy, but the
correct geographical and institutional set-up is essential in order to ensure
that these firms remain. As we have seen in this topic, the relationships
between institutions and geography not only remain complex but they
also differ between places, and as localities evolve these relationships
may need to be continually monitored and whenever necessary revised as
required. The efficacy of local decisions depends on global trends, and not
the other way around, and this is particularly marked in the case of small
