Geography Reference
In-Depth Information
functions and high level strategic planning of the world's MNEs will be
New York, London, Paris, Bonn, Tokyo, Moscow and Beijing. From
these highest levels, Hymer envisages that a geographical hierarchy will
characterize the spread of MNE operations, with 'intermediate' and
'lower-level' activities distributed across lower tier urban centres and
regions. In his words: 'geographical specialization will come to reflect the
hierarchy of corporate decision making, and the occupational distribution
of labour in a city or region will depend upon its function in the interna-
tional economic system' (Hymer 1972, p. 124). Taking into account what
has happened in the last two decades of globalization, as will be discussed
in Chapter 7, Hymer's foresight is all the more remarkable given that he
was writing during the height of the Cold War. An important qualifica-
tion made by Hymer, however, and also pre-empting Krugman (1991a,
b), is that while growth in the hinterland or periphery means growth in the
centre, the reverse does not necessarily hold.
Hymer is therefore one of the very first scholars to understand the
limitations of the traditional international economics approach which
prevailed at the time. As he notes (Hymer 1968, p. 9), 'the theory of the
firm and oligopoly theory have not been applied to the problems of trade
and international investment yet'. Much of the later international business
literature has explicitly and implicitly borrowed from Hymer's analysis
(see the comprehensive assessment in Dunning and Pitelis 2008). Hymer's
arguments have also been somewhat influential in certain types of geogra-
phy and location studies (e.g., Dicken 1977; Norton 1979, 1987). Indeed,
his 'correspondence principle' connects, by means of location theory, the
centralization of control within the modern corporation and the spatial
concentration of control in contemporary economic systems.
6
His work
emphasizes the critical role of MNEs in spurring uneven regional develop-
ment. Curiously, however, in spite of a few studies (e.g., Young et al. 1994;
Bailey and Driffield 2002; Pitelis 2002a, b; Kottaridi 2005a) explicitly
acknowledging Hymer's key importance in explaining the relationship
between multinational activity and sub-national regional development, the
international business literature itself has largely overlooked the
ante lit-
teram
relevance attributed by Hymer to the interplay between spatial, and
in particular urban, organizational and industrial structures, all of which
underlie the locational choice and the economic geography of MNEs.
2.3.2
Vernon: Product Life Cycle and the Comparative Advantages of
Nations (and the Metropolis)
The other seminal contribution to the economic theory of MNEs that is
particularly relevant for our purposes here is the product life cycle (PLC)
