Transnational Corporations: Fragmentation Amidst Integration

By Grazia Ietto-Gillies | Go to book overview

10

Fragmentation in the midstof integration

Theoretical and policy implications

10.1Introduction

A process of outreach across geographical space and national frontiers is nothing new in the history of mankind. Yet the current globalisation process is unprecedented in its spatial reach, in the velocity of interaction between people and institutions across space, in the scale of transactions, in the number of social and economic domains involved in the process, and in the number of people affected by it. It is also unprecedented in the fact that the globalisation process is accompanied by a process of fragmentation.

It has been argued in chapter nine that the current globalisation process is indeed a new phase of capitalist development of which the dominant causes are the TNCs and their activities and the development and diffusion of information and communication technologies (ICTs). They both contribute - separately and interactively - to the development of the productive forces in its quantitative and qualitative aspects. The evidence in chapter two shows a large and increasing role for the TNCs in most or all flows of resources, products and incomes across countries.

Parallel to this integrative role, the TNCs play a fragmentation role in relation to the organisation of production as well as in terms of the scope for divisions of other actors. The latter stems from their strategies towards other players in the economic system and in particular their strategies towards labour and governments. The fragmentation process has both an organisational and a locational (multi-country) dimension. This role was discussed in chapter six, while part II gave evidence that points to both an integration and a fragmentation role. TNCs are able to fragment other actors because of their high integrative power. Because they can operate effectively across frontiers better than other economic actors, they can use transnational strategies to divide labour and/or governments. Similarly, because they can operate internal and external networks effectively (chapter three), they can use their co-ordinating power to divide other actors.

These two co-existing aspects of TNCs' activities - integration and fragmentation - have a variety of implications for all the players in the economic system as well as for economic theory and for policy.

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