Energy, Minerals, and Western Security (review)

BOOK REVIEWS 237 individuals can specialize." Then he explains how technological changes have made the division of labor increasingly more sophisticated, and he lists the advantages and disadvantages of the division of labor. Second, he extends his theory to the international division of labor. Fundamental to the international division of labor is the ability of intermediate products to be traded economically. After having explained how intermediate product trade within firms can arise, Casson analyzes why and when this trade is preferred over arm's length trade between firms. Here he uses the concept of vertical integration, describing two theories— profit maximization and bargaining theory— in an attempt to synthesize these theories into a global approach. The findings from the first part of the book are applied to a variety of industry case studies in the second part: motors, bearings, synthetic fibers, tin, copper, bananas, and shipping. Each of these studies is written by an expert in the field. The arguments in Multinationals and World Trade are a significant step towards more comprehensive theories of the international division of labor and vertical integration. Thus it is a useful guide for future research. A second contribution is the use of industry studies as touchstones for the theory developed in the first part of the book. All too often in comparable publications the separation between theory and case studies appears unbridgeable. This is certainly not true of Casson's work: the industry studies are a big help in distinguishing what is important. However, a few questions remain unresolved. The role of wage differentials in the division of labor is one example. In at least three industry studies this was a major reason for multinationals to locate parts of their production process abroad (see, for instance, the motor, fiber, and banana industries case studies). In the theory section of the book, the division of labor is primarily explained through divisibility of products, while low labor costs, union membership , and other variables relating to labor costs are only casually mentioned. It is even suggested that high productivity, rather than low wages, explains the trend toward location in newly industrializing countries. But apart from a few minor contradictions between case studies and theories, such as the one just mentioned, the book offers a useful synthesis of theory and reality, making it worthwhile reading. Energy, Minerals, and Western Security. By Hanns W. Maull. Baltimore, Md.: The Johns Hopkins University Press, 1984. 413 pp. $35.00/cloth. Reviewed by M. K. Hermes, M.A. candidate, SAIS. In Energy, Minerals, and Western Security Hanns W. Maull provides an economic analysis of the effects of energy and hard minerals imports on Western security. He considers economic security to be threatened if (1) there is a risk of disruption to supplies, (2) the disturbance would demand major adjustments for the importer, or, (3) the adjustment process would be costly for Western societies. He uses these three factors as the framework for his analysis, which encompasses fuel minerals, including uranium, coal, oil, and natural gas; and 238 SAIS REVIEW nonfuel minerals, including hard minerals, as well as softer ores used in the manufacture of fertilizer. In each case he assesses the likelihood that dependence on foreign supplies of the resource might become a security risk for the West. Then he provides possible policy responses to the security risks. According to Maull, the resources that currently present security risks for the West include oil, natural gas, platinum group metals, phosphates, and a few steel alloys, particularly chromium, cobalt, manganese, and vanadium. The concentration of the supplies of these minerals makes two areas of the world very important to the consumer nations: the Persian Gulf and southern Africa. Their unique endowments makes maintaining resource flows from these areas a critical issue. These resources also present risks because of their relatively inelastic demand and the lack of significant, developed, and economically feasible supplies in stable pro-Western regions. Maull feels that economic risks will persist and will also tend to increase as resources in the stable pro-Western regions are depleted. In contrast, decreasing demand due to economic changes will have a dampening effect on the economic risk. The future net change in risk, therefore...