International production in a volatile regulatory environment: the influence of national regulatory policies on the spatial strategies of transnational corporations

Abstract

In face of the globalising strategies of transnational corporations (TNCs) it has become conventional wisdom in some quarters to regard the nation-state as an increasing irrelevance. TNCs, it is often implied, slice their way at will through national boundaries, rendering virtually all state economic policies ineffective. Although there is a kernel of truth in this viewpoint, it is a gross misrepresentation of current reality. Differential state regulatory (and deregulatory) policies in the areas of trade, industry and foreign investment remain highly significant. They are exceptionally important to the strategic behaviour of TNCs which, of course, attempt to take advantage of national differences in regulatory regimes in their pursuit of global competitive advantage. The result is a dynamic bargaining process in which each party attempts to capture the greatest gains. Current developments in the international political economy, notably the strengthening of regional economic integration in Europe and North America and the continuing GATT negotiations. are transforming the geographical scale and nature of the ‘regulatory surface’ on which TNCs operate. In exploring the relationship between regulatory environments and TNC strategies examples will be drawn from a variety of sectors, including automobiles, electronics, textiles and clothing, and pharmaceuticals.