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What this argument did not anticipate was that new, flexible methods of manufacturing made possible by electronics sharply reduced the minimum economies of plant scale. These opened up new opportunities of producing components either for export to the big car companies in America or Europe, or for sale to the local affiliates of those same companies. In Brazil, for example, the change has meant a vast increase in the added-value part of the supply chain in local hands. Their exports of auto components have risen sharply as VW, Ford and other majors have altered their supply policies.

The ideas that interdependence necessarily involves closer interaction among governments and firms is not new; it was suggested nearly twenty years ago by a German scholar, Karl Kaiser, when the debate first opened on the meaning and significance of 'interdependence' (Kaiser, 1971). Implicitly criticising much of the thencurrent discussion, Kaiser pointed to the asymmetry of government power in transnational politics. He drew on the work of Aron who had introduced the concept of 'transnational society' to international relations to indicate that states' options are affected by developments in the flow of ideas and beliefs across borders and by non-national organisations (Aron, 1966; p.

The more complex the economy, the greater the difficulty in establishing and maintaining explicit policies. Complexity leads to greater reliance on implicit policy, or even in extreme cases to policy setting by default; one can tell only with hindsight what the policy was in the first place. One observer concluded recently that 'the state's most crucial task by far is to provide the rule of law' (Crook, 1989). But the rule of law has to be one that appears reasonably stable and not plagued by frequent, arbitrary alteration.