ABSTRACT
What happens then when the company concerned has production facilities around the world and deliberately locates important parts of the process overseas in order to take maximum advantage from the availability of low-cost labour, cheap capital or other governments’ subsidies? Such a situation is aptly illustrated by the following quotation from Robert Reich’s Work of Nations:
When an American buys a Pontiac le Mans from General Motors he or she unwittingly engages in an international transaction. Of the $20,000 paid to GM about $6,000 goes to South Korea for routine labour and assembly operations, $3,500 goes to Japan for advanced components (engines, transaxles, electronics), $1,500 to West Germany for styling and design engineering, $800 to Taiwan, Singapore and Japan for small components, $500 to Britain for advertising, $100 to Ireland and Barbados for data processing. The rest-$8000-goes to strategists in Detroit, lawyers and bankers in New York, lobbyists in Washington, insurance and health care workers all over the country and General Motors’ shareholders-most of whom live in the US but an increasing number of whom are foreign nationals.
