Political Obstacles to Globalization: the Daewoo-Thomson Affair

Abstract

This paper examines some political contstraints which limit the process of globalization. While economic theory would predict that firms locate the various stages of production of their products in those countries demonstrating clear comparative advantages. and while intra-firm trade data shows that multinational firms do, by and large, try to globalize their production, there are occasional political obstacles to such strategies. Many Korean firms have expanded into Europe for economic reasons, but the case of Daewoo Electronics ill fated attempt to purchase Thomson shows that analysts must take political. as well as economic conditions into account before the process of globalization can be understood.