The World Trade Organization in the New Global Economy

The World Trade Organization in the New Global Economy

Trade and Investment Issues in the New Millennium Round

New Horizons in International Business series

Edited by Alan M. Rugman and Gavin Boyd

Despite the disruption of the multilateral trade talks at Seattle in December 1999, the work of the World Trade Organization (WTO) continues. The trade and investment issues that have been outstanding since the Seattle events are explored in this far reaching book. The distinguished contributors combine several analytical approaches for a comprehensive assessment of the trends, problems and opportunities demanding attention in international trade negotiations.

Chapter 4: Corporations and structural linkages in world commerce

John B. Davis and Joseph P. Daniels

Subjects: business and management, international business, economics and finance, international economics

Extract

John B. Davis and Joseph P. Daniels The Millennium Round of multilateral negotiations under the auspices of the World Trade Organization (WTO) confronts international trade and investment issues that are more complex and intractable than those in past rounds on account of increasing structural and policy interdependencies between the industrialized nations. Negotiators will have to think not only in terms of trade and investment between separate nations but also in terms of a system of production that operates across nations. In previous rounds, liberalizing international trade dominated the agendas. But international trade and investment have become more highly interlinked in the last decade, so that it has become difficult to consider trade liberalization apart from capital flows. At the same time, the issue of liberalizing international financial flows has been complicated by the massive expansion in the 1990s of portfolio capital flows and by financial crises in Asia and elsewhere. This chapter consequently examines international trade and investment linkages in terms of long-term structural change, tying this to corporate strategies responding to and underlying this change. Our principal subject is the theory of international production and the emerging system of international production, and we comment on policy initiatives regarding trade and investment generated by increased recognition of their interlinked character. International production has been investigated within at least six branches of theory: international capital movements, trade, location, industrial organization, innovation, and the firm (Cantwell et al., 1986). Various theories of international production investigate different questions posed in theoretical branches...

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