The Selected Essays of John H. Dunning, Volume II
Chapter 15: Globalization: The Challenge for National Economic Regimes
* INTRODUCTION The role of government, as an organizing force in a global market economy, is coming under increasing scrutiny. Yet, in spite of a widespread eagerness to contain or reduce the extent of governmental intervention in the management of domestic resource allocation, it remains a fact that the countries which have recorded the most impressive economic performances over the past three decades are those whose governments have exerted a strong and positive influence over all aspects of commercial affairs.1 This chapter addresses just one, but an increasingly important, aspect of this enigma, viz. the implications of the globalization of business activity for the economic sovereignty of individual nation states. In particular, it considers the implications of the globalization of business activity for the organization and management of location bound human and physical assets. Its main thesis is that the pace and direction of technological, political and institutional change, especially as it has affected the extent and character of international transactions, is demanding a systemic recasting of the traditional role of national governments as custodians of the economic welfare of the citizens within their jurisdiction. Central to this thesis is the premise that, as a result of the dramatic growth in the cross-border linkages forged by multinational enterprises (MNEs), the latitude for autonomous and purely domestic oriented actions on the part of the governments of nation states – that is to say actions which only affect the constituents of those states and not those of others – is being severely curtailed. Increasingly, too,...
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