strategy
Increasing activity of transnational corporations
Synonyms:
Expanding dominance of multinational firmsEscalating economic control by transnational corporations
Context:
The top 350 transnational corporations control 40% of world's merchandise trade and the largest 15 each have a gross income larger than the GDP of 120 countries. Implementation:
The importance of transnational corporations as integrating agents and carriers of the world economy, as witnessed by their role in current flows of capital, finance, technology and labour, continues to grow. In the early 1990s there were an estimated 37,000 transnational corporation parent firms and 200,000 affiliates, compared to roughly 7,000 or so transnational corporations that had been based in the major home countries in 1970. The 100 largest companies by foreign assets had accounted for one third of the world-wide stock of foreign direct investment and controlled US$3.3 trillion ($1012) in global assets in 1991, of which an estimated $1.3 trillion represented assets outside the home countries. In the past few years, 73 million people were employed directly by transnational corporations and their foreign affiliates, and many more in activities linked to them through forward or backward linkages.FDI flows, the principal measure of annual changes in the cross-border investment activities of TNCs, increased throughout the post-war period, experiencing unprecedented acceleration during the second half of the 1980s. Between 1985 and 1990, worldwide FDI outflows increased at a rate of 24% a year, almost twice as fast as that of the growth in exports and two and a half times as fast as that of the growth in world output.
Claim:
The structure of the multinational corporation is a modern concept designed to meet the requirements of a modern age; the nation state is a very old fashioned ideas and badly adapted to serve the needs of our present complex world. Broader:
Using dominance ethicForming transnational economyEngaging in multinational commerceConcentrating market power Constrains:
Forming transnational political interdependenceCounteracting economic control by transnational corporations Constrained by:
Developing codes of conduct for international businessStrengthening negotiating capacity of governments with transnational corporationsSlowing pace of structural adjustment Facilitates:
Facilitating economic structural adjustmentFacilitating access to markets for countries in transitionIncreasing employment through transnational corporation activityStrengthening national policies to encourage higher levels of foreign direct investmentEncouraging productive skills development through promotion of transnational corporate activity Facilitated by:
Increasing intra-firm tradeSupporting multinational cooperationLinking corporate strategies to employment effects Problems:
OligopoliesReferences:
Chi, Schive: The Foreign Factor: the multinational corporation's contribution to the economic modernization of the Republic of ChinaUnited Nations: World Investment Report 1992: transnational corporations as engines of growthLall, Sanjaya, et al: Transnational Corporations from Developing CountriesVaitsos, Constantine: Intercountry Income Distribution and Transnational EnterprisesHalbach, Axel J: Multinational Enterprises and Subcontracting in the Third World: a study of inter-industrial linkages Subjects:
Action → Action Commerce → Business enterprises
Commerce → Multinationals
Type Classification:
G: Very Specific strategies Related UN Sustainable Development Goals:
