chapter  12
31 Pages

VERTICAL INTERFIRM RELATIONS

In post-war economic history three phases with changing trade patterns may be distinguished in geoeconomic terms, i.e. exports, internationalization and globalization. The first comprises exports by firms from their national market base and extends to the emergence of newly industrialized countries as export powers. The subsequent period is characterized by the internationalization of production by multinational firms (MNEs). These MNEs established themselves as local players with direct distribution of their goods in relevant markets but shifted production activities abroad to exploit factor price differentials. The present era of globalization implies that firms need to plan their insertion in clusters of firms without frontiers in the medium to long run (compare OECD 1992b). Globalization thereby denotes growing synergies of national economies by means of a certain degree of functional integration of activities that may be dispersed at world scale.