Aisha Dos Santos

POLI 372A

Susan Strange’s “Rethinking Structural Change in the International Political Economy: States, Firms, and Diplomacy” made me reflect upon the ways in which differing domains of studies in international business and international relations have tried to study the structural changes of the world economy, but they have neglected to realize that structural changes have moved beyond the spheres of finance and domestic production. These structural changes account for why we are beginning to see multinational corporations affecting the diplomacy between the state and other competing states. States are now competing with other states over multinational corporation firms because they realize that due to the internationalization of production it has acted as a catalyst towards the industrialization of the developing world. Developing countries now want to industrialize at rates that catch up with already developed countries. This exemplifies the ways in which realist state-centric theories have come to dominate the lens through which behaviors within the international system are coming to be studied, but with this rapid globalization of industrialization in the world’s economy and the emergence of MNCs, these phenomenon are really displaying the gaps that these theories have not been able to fully rationalize .

What I have gained from this reading is that social scientists have a tendency to use empirical data and scientific tools to study states and the global political economy. Social scientists desperately need to broaden their research focus towards ways that recognize the ways in which new technologies have increased the globalization of production, and this internationalization has led to industries being produced in states around the world. This can be attributed to trade and tariff barriers being gradually struck down, the mobility of capital increases, and the lowering costs of transborder transport of goods/services. Social scientists need to become more aware of this activity occurring in the free market, and the ways competition amongst producers has lowered costs to consumers in both the developed and underdeveloped world. This has offered a variety of goods and services and this competition in the market has gradually increased the income of workers. Therefore,, states are beginning to see the benefits resulting from this industrialization even in traditionally socialist states. These factors have contributed to states forging diplomatic relations not only between states themselves, but have widened their diplomacy towards firms, because states are realizing that capitalizing and persuading a firm to locate in their home state is an advantageous venture. This changing of diplomatic arrangements displays the way that states that are no longer the main power drivers in the international economic and political system. I think this can be attributed to the breaking down of regulations and economic barriers, and this increased competition in the free market has made alliances between states and firms attractive, due to a payoff that benefits both parties. It seems that they need each other, whether they agree to it or not, due to the nature of globalization and the liberalization of international finance.