Monopolistic activity by transnational enterprises

Transnational monopolies
Transnational monopolies in developing countries

Nature

The predominance of transnational enterprises, including transnational corporations, in world economic affairs can often create monopolistic structures which reduce world efficiency and may displace or prevent alternative activities. The concentration of transnational enterprises on the production and consumption of certain types of products and services not only influences consumption patterns but, in developing countries, often responds mainly to the demand of small segments of the population.

Incidence

Transnational corporations increasingly gain proprietary rights to improved seed varieties, often without recognizing the rights of the countries from which the plant materials were obtained. Much of this material originates in developing countries.

Claim

The right to install and operate, in a developing country, mining equipment, processing plants, factories, or services such as extensive telecommunications networks, has sometimes been purchased by multinational and international firms with payments to government officials, or effected through unfairly conducted bidding. The gains to be made by such arrangements are often the exaggerated operating profits of a firm which has secured a monopoly position. A monopoly foreign ownership of plant, telephone exchanges and the like can be a multiple threat to developing countries: because of the drain on local currency as money leaves the country and flows to the multinational; because the raw materials processed or the telecommunications systems may be a strategic part of defence capabilities but are not under government regulation; because foreign-owned telecommunications operations may not secure privacy and may become adjuncts of their home country's intelligence services; and because the multinational monopolies may become activity involved in influencing the host countries political affairs.

Counter-claim

The capital investment of a multinational form to establish itself is a host country is enormous. Projects may take several years and tie-up a considerable portion of a firms financial, technical, manufacturing and manpower resources. Pay-back may be protracted and even uncertain if political instability enters the area. It is therefore legitimate for the multinational to defend its vital interests; neglect of these could cause the failure of the firm, with adverse economic impact on hundreds of thousands of people among international supplies companies, employees and their families, individual investors and institutions. Self-defence legitimately covers counter-efforts to sabotage, whether it is physical, economic or political. Many operations such as mineral extraction from one site, or telecommunications, cannot be performed by two companies at a time, thus the appearance of monopolization is a false one.