The paper starts with a brief analysis of Hymer's early work on the determinants of foreign direct investment (FDI) and of his later work dealing with their effects on the nation‐states, their governments, labour and the international division of labour. The paper then goes on to argue that the existence of nation‐states with their specific regulatory regimes gives companies special advantages particularly with regard to labour and national governments. These can be turned into competitive advantages towards rivals. The advantages of transnationality, deriving from operating in different regulatory regimes, are considered as one of the contributory elements to the explanation of international production and its geographical configuration. This approach is seen as building a bridge between the issues raised in the later works by Hymer (his Marxist phase) in relation to nation‐states and labour, and his earlier dissertation work on explanations of FDI. Policy implications are drawn in the last section.

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