Historical patterns of globalization : the growth of outward linkages of Swedish long-standing transnational corporations, 1890s-1990s

Abstract: The study addresses the outward cross-border linking of the Swedish economy and its most important transnational corporations during the 20th century. It explores the aggregate level of Swedish industry, and most importantly, the firm level of a group of eight long-standing transnational corporations, which during the post-1945 period represented roughly half of Sweden’s foreign industrial activity in terms of employment, e.g., Alfa Laval, ASEA, Ericsson, Sandvik, SKF, AGA, Electrolux and Atlas Copco. Since most of these corporations existed already a century ago it was possible to explore their historical trajectories within the general process of globalization. Hence, the study contributes to the testing of the globalization thesis with a small, open, developed economy as the point of reference. Based on aggregate national data and data on levels of foreign activity of Swedish transnational corporations the study presents a phase model of globalization, identifying first an ‘initial phase’ of globalization from ca 1871 to 1929, second a ‘stagnation phase’ (1930-1949), then a third ‘expansion phase’ (1950-1979) and finally, a ‘highlight of globalization’ phase, beginning in 1980 and continuing into the 21st century. In order to gain deeper insights into the historical process of Sweden’s outward economic linking it then looked in more detail at the eight firms mentioned above. Employing a quantitative formal model of foreign corporate activity, the study focusses on changes in the relative magnitude of foreign employment and sales (‘intensity’) and on the geographical distribution of foreign subsidiaries (‘extensity’). The two former categories are combined into an ‘index of transnationality’, which serves as a principal analytical tool for uncovering long-term change. The study concludes that for Swedish industry and its largest transnational corporations the term globalization represents more of a historical, continuous long-term trend than an exclusively contemporary development. In fact, the only period in time when we see a general stagnation in the positive trends was 1930-1945. Moreover, the study found at least two periods of rapid outward linking on the part of some of the most important Swedish corporations, apart from the current one, that is, the decade and a half preceding World War I and the 1960s. Nevertheless, levels of relative magnitude of activity abroad and of geographical spread attained by Swedish industry and its transnational corporations during the last two decades, were in many respects unprecedented. Findings on the variations in the actual pace of globalization during the whole 20th century demonstrated firstly, that positive change in geographical spread of the group of long-standing transnational corporations proceeded at an increasing pace when calculated in absolute terms. For the 1960-1999 period, the existence of positive long-term trends in the magnitude of both foreign sales and foreign employment were discovered. Also, there was an acceleration of the pace at which foreign sales increased over time, when calculated in absolute terms.