Politics of Globalization and National Economy

Abstract

This paper examines the globalization process of German core export metalworking industries, to show how the globalization of national corporations has different effects on domestic economies. Contrary to the prevalent views on the globalization of production, this paper holds that the outcomes and patterns of globalization vary, due mainly to the politics of the main actors inside and outside corporations. This paper compares Germany’s negotiated globalization with U.S. employer unilateralism. In most U.S. corporations, employers decide how to globalize based on the short-term perspective of shareholder value. By contrast, in Germany, main industrial actors—including employers, works councils, and trade unions—collectively negotiate how to globalize. In this conflict-laden process of collective negotiation, German actors have created a political compromise that combines the upgrading of domestic production with globalizing overseas, whereas Americans have failed to do so. Furthermore, this paper emphasizes that divergent patterns of globalization are not predetermined by national institutions. To the contrary, the successful outcomes in German globalization come mainly from actors’ proactive readjustments in their traditional model of industrial relations, creating new practices, such as active union involvement in company-level bargaining, and the democratic bottom-up process instead of the traditional top-down process of negotiation.