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Abstract
The globalisation process provides opportunities for developing countries in the context of tighter international agreements that limit their policy instruments for promoting industrialisation. An option for governments in this new context is to ‘target lead transnational corporations’, whose corporate strategies are more attuned to their developmental circumstances and industrial aspirations, in order to locate nodules of their international systems of integrated production in their economy. This can have a clustering effect in the same host economy that can contribute significantly to the creation and consolidation of internationally competitive industries there. Here we examine the cases of two developing countries: one that achieved impressive results by following such a policy and another that missed a golden opportunity by not doing so.
Le processus de mondialisation offre de nouvelles chances pour les pays en développement dans un contexte de traités internationaux plus stricts qui limitent leurs instruments politiques destinés à promouvoir l'industrialisation. Dans ce nouveau contexte, les gouvernements ont la possibilité d'attirer des corporations internationales leader dont les stratégies corporatives sont plus en accord avec leur propre situation de développement et leurs ambitions industrielles, afin d'établir des nodules de leurs systèmes internationaux de production intégrée à l'intérieur de leur économie. Ceci peut entraîner un effet d'attraction à l'intérieur de l'economie nationale, qui peut contribuer à créer et à consolider des industries concurrentielles à niveau international dans le pays. Dans cet article, nous analysons les cas de deux pays en développement: l'un a obtenu des résultats impressionnants en suivant une telle politique, l'autre a manqué une chance unique de faire.
Notes
Michael Mortimore is Chief, Unit on Investment and Corporate Strategies, United Nations Economic Commission for Latin America and the Caribbean, Santiago, Chile and Sebastian Vergara is Consultant, Unit on Investment and Corporate Strategies, United Nations Economic Commission for Latin America and the Caribbean, Santiago, Chile.
1. These are large TNCs with a strong global presence that are the principal innovators in specific industries. Their presence in any host country often has a multiplier effect in terms of attracting other of the participants of the global value chain in which they operate.
2. The year 2001 was distorted by the atypical purchase of a Mexican bank by Citigroup for $12.5 billion [CitationUN-ECLAC, 2003].
3. The opportunity afforded foreign investors to litigate against state policy of Mexico produced uncertainty about the effectiveness of national policy. Moreover, the number of performance requirements prohibited by NAFTA was much greater than the Trade Related Investment Measures (TRIMs) agreement of the World Trade Organisation (WTO) and represented a harsher environment for policy-makers dealing with production effects.
4. While physical inputs for exports to NAFTA countries by NAFTA members can originate – indiscriminately – from the US, Canada or Mexico, the US production sharing mechanism effectively dissuades non-US cloth and other inputs and processing from CAC countries. The Caribbean Basin Trade Partnership Act of 2000 attempted to face up to that problem by doing away with some quotas, allowing for the incorporation of a certain amount of locally produced cloth and permitting some further local processing (cutting, stone washing, etc.). Furthermore, it is hoped that the Central American Free Trade Agreement currently under negotiation will provide NAFTA-like rules of origin for the apparel industry; however, the US textile industry seems set on maintaining the existing restrictions.
5. The main selection criteria at this stage included stable economic and political conditions, human resource availability and labour conditions, the operational cost structure, a ‘pro-business’ environment, logistics and manufacturing lead-time and ‘fast track’ administrative permit processing [CitationShiels, 2000].
6. Such as low cost and good quality human resources (workers, technicians and managers) with English language capabilities, an open economy, low levels of corruption, political and economic stability, transparency, a solid legal tradition and relevant incentives.
7. First generation FDI promotion usually does not go beyond opening up the economy to FDI. Second generation promotion is based on the active marketing of a location, usually by way of an investment promotion agency. Third generation FDI promotion incorporates a more focused promotion strategy centred on a defined subset of TNCs rather than FDI in general [CitationUNCTAD, 2002]. The more successful countries have used a targeted approach to improve their chances of attracting the type of FDI more likely to assist them to advance towards defined industrial priorities and overall development objectives.
8. A significant number of Intel ‘satellites’ have set up in Costa Rica. These companies usually have few employees and contribute relatively little to the local cluster formation, however, they demonstrate Intel's attractiveness and reach.
9. See: http://www.japanauto.com/statistics.
10. TMC's regional production system was made consistent with the initiatives of the US automotive TNCs with regards to the Canada–US Free Trade Agreement in the sense that Canada became a significant part of the North American production system. That was not the case with the NAFTA, however, as Mexico does not play a role in any way similar to that of Canada within its regional production system.
11. A questionnaire administered to 63 of the largest 100 foreign manufacturing firms in Mexico in 1990 produced the opinion of 56 of the 63 that the success of the ISI model during 1973–82 was ‘scarce’ [CitationMortimore and Huss, 1991].