Introduction

Globalization has many faces. Perhaps the most salient feature of globalization is that it appears that the world becomes smaller as transport costs are reduced, trade barriers disappear, the exchange of information becomes less expensive, and information itself becomes an internationally traded good. According to some commentators, such as Thomas Friedman (2005), the world has even become flat. Although a more even spreading of economic activity is certainly possible, the geographical economics approach also indicates that globalization or economic integration in general may imply a spiky or lumpy world with a growing income gap between rich and poor nations, and in which, due to decreases in trade costs, center–periphery structures become the rule instead of the exception.

Among the major actors in the present era of globalization are no doubt the multinational enterprises, or multinationals for short. These firms are probably the most mobile among all firms, with sufficient “international” knowledge to seize a profitable opportunity when it presents itself. Without specific cultural ties to individual nations, they can seemingly move in and out of countries rapidly, with only economic incentives to act upon. The footloose nature of multinationals is strengthened by the fact that such firms increasingly no longer produce “under a single roof.” Baldwin (2006) calls this process “the second unbundling.” The first unbundling was initiated by the transportation revolution of the first Industrial Revolution (1750–1900), which made it possible to spatially separate production from consumption, thereby facilitating international specialization on an unprecedented scale.