The new diplomacy we sketched in chapter 1 has three critical and intertwined ingredients: the bargaining among states for power and influence, the competition among firms contesting the world market and the specific bargaining between states and firms for the use or creation of wealth-producing resources. All three are critically influenced by and in turn influence the world structures of security, finance and knowledge (Cox, 1987; Strange, 1988). The changes in these structures during the last few decades have altered the ground rules for everyone. Structural change has not, however, had a uniform effect on either firms or countries. Though the experience of structural change is common to all, the consequences have been sharply different for both countries and firms.

To make the point, consider the striking contrast during the period 1973–85 ‘between the serious economic setbacks suffered by the newly oil-rich Mexico and the notable strides made by the oil-poor and oil-hungry Brazil’ (Hirschman, 1986). While Mexico's political weakness was excused and its economy helped out by the US, Brazil's relationship with Washington steadily deteriorated and its policies came under American attack. Hirschman's explanation, influenced by the radical Brazilian economist, Antonio Barros de Castro, lay in the fortunate coincidence for Brazil of the 1983 devaluation with the moment when prior investments in heavy industry and infrastructure planned by the military government in the 1970s came to fruition (Lowenthal, 1987). Growth resumed strongly after the hiccup of the debt shock, and expanded industrial exports combined with harsh decisions to reduce imports financed enough of the debt service to maintain trade credit.