Globalization and American Power

National Interest, The, Spring, 2000 by Kenneth N. Waltz

For one thing, even if all politics has become global, economies remain local to a surprising extent. Countries with large economies continue to do most of their business at home. Sectors of the American economy that are scarcely involved in international trade--such as government, construction, non profit organizations, utilities, and wholesale and retail trade--employ 82 percent of Americans. [4] As Paul Krugman observes, "The United States is still almost 90 percent an economy that produces goods and services for its own use." For the world's three largest economies--the United States, Japan, and the European Union taken as a unit-exports account for 12 percent or less of GDP. [5] The world, then, is less interdependent than is usually supposed. Moreover, developed countries, oil imports aside, do the bulk of their external business with one another, which means that their dependence on imported commodities that they could not easily produce themselves is further reduced.

Reinforcing the parochial pattern of productivity, the famous footloose corporations also turn out to be firmly anchored in their home bases. A study of the world's one hundred largest corporations concludes that not one of them could be called truly "global" or "footloose." Another study found exactly one multinational corporation that seemed to be leaving its home base: Britain's chemical company, ICI. On all the important counts--location of assets, site of research and development, ownership, management--the importance of a corporation's home base is marked. And the technological prowess of corporations corresponds closely to that of the countries in which they are located.

Again, within advanced countries at similar levels of development that are closely interrelated, one would expect uniformities of form and function to be most fully displayed. Indeed, GDP per work hour among seven of the most prosperous countries nearly came into alignment between the 1950s and the 1980. [6] Yet, while countries at a high level of development do tend to converge in productivity, that is something of a tautology Stephen Woolcock, looking at forms of corporate governance within the European Union, finds a "spectrum of approaches" and expects it to persist for the foreseeable future. [7] Since the 1950s, for example, the economies of Germany and France have grown more closely together as each became the principal trading partner of the other. But a study of the two countries concludes that France has copied German policies yet has been unwilling or unable to copy German institutions. [8]

THE MOST telling refutation of the belief that state power has sharply declined is to be found in the state's capacity for transformation. Because technological innovation is rapid, and because economic conditions at home and abroad change often, states that adapt easily to such changes enjoy considerable advantages. International politics remains inter-national. National systems display a great deal of resilience. Those that adapt well grow and prosper; others just manage to get along. In this spirit, Ezra Taft Benson, when he was President Eisenhower's secretary of agriculture, gave this kindly advice to America's small farmers: "Get big or get out."