Globalizing America

Globalizing America

The USA in World Integration

New Horizons in International Business series

Edited by Thomas L. Brewer and Gavin Boyd

The authors address questions in current business and policy literature regarding the structural linkages evolving in the globalization process. The authors conclude that the US administration and American firms have to be more responsive to the interests of the international community that are being vitally affected by the integrating effects of transnational production and world trade.

Chapter 5: The globalization of US industries

Mona Makhija and Sandra Williamson

Subjects: business and management, international business


* Mona Makhija and Sandra Williamson In this chapter, our basic purpose is to consider the industry level of analysis in the overall discussion regarding globalization in the USA. In order to accomplish this, we begin by defining a global industry, and differentiating it from other levels of analysis also relevant to globalization, such as the firm, the economy or the role of international institutions. While the globalization of an industry has direct relevance and significant consequences for each of these other levels of analysis, we leave this discussion for other chapters. From our perspective, a global industry is one that is vertically linked to those industries of other countries. Vertical linkage stems from a type of international production that requires industries in different countries to specialize in particular stages of a good’s production. In such a case, a sequential mode of production arises in which one country imports a raw or intermediate good from another country, uses that good in the production of its own good and then exports its own good to another country. This process continues until the good in its final form reaches its final destination. In this respect, a global industry is ‘a series of linked domestic industries in which the rivals compete against each other on a truly worldwide basis’ (Porter, 1986, p. 18). None the less, a central role is played by domestic or national industries in a global industry. This is due to the fact that specific national industries are...

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