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"When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist".
(Dom Helder Camera -former archbishop of Olinda, Recife, Brasil) (1984)

World indicators on the environmentWorld Energy Statistics - Time SeriesEconomic inequality
  (by Róbinson Rojas Sandford)(1997)

The 'structural adjustment' of today's world economy, like in earlier
periods, is an interactive process between firms, markets and states.
The process, like in earlier periods, entails that the political
establishment serves the economic establishment, and the economic
establishment serves the most powerful capitals, the latter being, in
the second half of the twentieth century, what in general terms is
defined as 'transnational corporations'.( see BOX 1)

Both nationally and internationally, markets are dominated by groups of
transnational corporations, the latter creating an economic environment
where perfect competition does not exist, and, because of that, in many
aspects accumulation of capital becomes contradictory with accumulation
of social welfare and also contradictory with sustainable economic

By and large, globalization is a transnational corporations affair.
"World Investment Report 1997" informed:

-"With an estimated $7 trillion in global sales in 1995 -the value of
  goods and services produced by some 280,000 foreign affiliates-
  international production outweighs exports as the dominant mode of
  servicing foreign markets. The growth of global sales has exceeded
  that of exports of goods and services by a factor of 1.2 to 1.3
  since 1987". (World exports in 1995 were $5.1 trillion, and world
  gross domestic product $27.8 trillion. UNCTAD estimates put the
  ratio foreign/domestic sales of TNCs around 40%, thus, it can be
  estimated that transnational corporations' good and services reached
  around $17-$18 trillion, accounting for around 63% of world gross
  domestic product. Considering that the top 100 transnational
  corporations produced $ 5.0 trillion in 1995, which accounts for about
  29% of TNCs' total, we have a case of heavy concentration of capital,
  which should correlate with political power. Note by R.R.)

-"Foreign direct investment (FDI) continues to be a driving force of
  the globalization process that characterizes the modern world economy.
  The current boom in FDI flows, which has been accompanied by
  increasing flows of foreign portfolio equity investments, underscores
  the increasingly important role played by transnational corporations
  (TNCs) in both developed and developing countries. This role has been
  facilitated by the liberalization of FDI policies that has taken place
  in many countries in recent years, as part of an overall movement
  towards more open and market-friendly policies. However, reaping the
  benefits of FDI liberalization requires not only that barriers to FDI
  are reduced and standards of treatment established -the focus of most
  FDI liberalization to date- but also that competition in markets is
  maintained. This third component of FDI liberalization -maintaining
  the proper functioning of markets in which TNCs invest- is the special
  topic of this year's 'World Investment Report', which examines the
  interaction between FDI, market structure and competition"...


In the concluding remarks of their almost 400-page report, the
scholars in the United Nations, matching the intellectual dishonesty
shown by the scholars hired by the World Bank (see my former lectures),
argue that, in the first place, "the same competitive strength that
enable firms to expand their international production activities could,
under certain conditions, also create opportunities for TNCs to
eliminate competitors and assume dominant positions within markets,
leading to possible reduction in market efficiency, and to engage in
anticompetitive behaviour", but, then, in the second place, "in a
globalizing and liberalizing world economy, the number of actual or
potential entrants into foreign markets increases. This gives rise to
a greater potential for competition in markets regardless of their
geographical scope", never mind that "entry barriers are less the
outcome of government policies and more associated with costs and
know-how or technological advances", the main dynamic features of the
creation and development of oligopolic markets!

Never mind, also, that, when characterizing the FDI boom that began in
1995, the report states that there have been a "boom in intra developed
country mergers and acquisitions (M&A)", and that "even in the current
boom, cross border M&As, especially in the United States and Western
Europe, are playing an important role in boosting FDI"..."The value of
such M&As increased by 16 per cent in 1996, to $275 billion" (the
meaning of this figure is that $275 billion out of a total of $350

But there is more about the internal dynamic of the capitalist system
as reflected in the way in which transnational corporations develop. The
report adds:

   "Complementing the increases in M&A and FDI flows, the number of
    cross-border inter-firm agreements (equity and non-equity, other
    than strategic research-and-development (R&D) partnerships) has
    also increased. In 1995, nearly 4,600 such agreements were concluded,
    compared with about 1,760 in 1990. These agreements take place
    primarily between firms in developed countries: United States firms
    participated in 80 per cent of them, European Union firms in 40 per
    cent and Japanese firms in 38 per cent. Recently, firms based in
    developing countries have also begun to conclude such agreements
    actively. The number of cross-border inter-firms agreements (other
    than strategic R&D partnerships) with developing-country firm
    participation has increased in absolute numbers, as well as a share
    of the world total (from 27 per cent during 1990-1992 to 35 per cent
    during 1993-1995). Although there was a decline in 1995, the number
    of strategic R&D partnerships (in core technologies, such as
    information technologies and biotechnology), has also been rising
    steadily since 1990. Again, developing-country firms assumed a
    bigger role in strategic partnerships (3 per cent in 1989 to 13 per
    cent in 1995), suggesting that these firms may have attained
    sufficient technological sophistication and capacity to make them
    worth having as partners".

A better picture about the above is given if we add that the largest
100 TNCs in the world, based in industrial countries, had foreign assets
in 1995 amounting to 1,700 billion, while the largest 50 TNCs based in
developing countries totalled only $79 billion in 1995, which is less
than 5%. Very much the case of "junior partners" in the 'strategic

More transnationalization (more globalization) and more oligopolic
domination of the world economy have been the main feature of TNCs's
growth, which is consistent with economic theory. The World Investment
Report 1997 explains:

    "Despite the growing number of small and medium-sized enterprises
    "with investments abroad, a good part of FDI continues to be
    "concentrated in the hands of a small number of companies. The
    "largest 100 TNCs, ranked on the basis of the size of foreign assets,
    "own $1.7 trillion assets in their foreign affiliates, controlling
    "an estimated one-fifth of global foreign assets. In the United
    "States, 25 TNCs are responsible for half of that country's outward
    "stock, a share that has remained almost unchanged during the past
    "four decades. For six out of nine developed countries for which
    "such data are available, 25 TNCs account for more than a half of
    "their respective countries' outward stocks. Both the top 100 TNCs
    "worldwide and the top 50 developing-country TNCs are becoming
    "more transnationalized, at a faster rate in the latter case". 
     (Foreign assets increased 30% per year in the period 1993-1995
      for the largest 100 TNCs, and 280 per cent for the top 50 TNCs
      based in developing countries. R.R.)


    "The Triad (European Union, United States and Japan) is home to 87
    "per cent of the top 100 TNCs and accounts for 88 per cent of their
    "foreign assets. Likewise, China, the Republic of Korea, the Hong
    "Kong Special Administrative Region of the People's Republic of
    "China"..."and Mexico are home to 56 per cent of the top 56 firms
    "based in developing economies, and account for two-thirds of their
    "foreign assets"...
    "...Electronics is the most important industry as far as the largest
    "TNCs are concerned, accounting for some 16 per cent of all firms'
    "foreign assets in each of the two lists of top TNCs. Automotive and
    "chemical firms also feature prominenttly in both lists, but more so
    "in the list of the top 100 firms. Petroleum and mining firms,
    "although few in number, tend to rank high in both lists".
    (It is important to remember that UNCTAD lists as 'pollution-intensive
     industries' the following: chemicals, pulp and paper, petroleum and
     coal products, and metal. R.R.)

TABLE 1 illustrates the process of concentration of economic power in
the world economy showing the following:

       a) in 1968, the industrial countries (20) accounted for 72.7
          per cent of total gross national product of the nation-states
          listed as part  of the 100 largest economic entities in the
          world. By 1995, that share increased to 82.7 per cent;

       b) in 1968, the value added of the TNCs included in the list (44)
          accounted for 8 per cent of the total (gross annual sales plus
          gross national product). By 1995, that share was 12 per cent.

       c) gross annual sales grew 16.7 per cent per year from 1968 to
          1995, while gross national product grew 11.4 per cent.

       d) if we take the 50 largest economic entities, 8 of them were
          TNCs in 1968, and 12 of them were TNCs in 1995. Also, in
          1968, gross annual sales accounted for 3.5 per cent of the
          total (gross annual sales plus gross national product), and
          6.1 per cent by 1995. Moreover, gross annual sales grew at
          an annual rate of 19.5 per cent, while gross national product
          grew 11.3 per cent per year.
              TO SIZE OF ANNUAL PRODUCT: 1968 AND 1995
           [A]                          [B]
                    Annual                             Annual
                    product*                           product*
      Economic      (billion       Economic            (billion
Rank  entity        dollars)       entity               dollars)
-----------------------------      -----------------------------
  1   United States  880.77        United States        6,952
  2   U.S.S.R        228.45+       Japan                5,108
  3   Japan          141.81        Germany              2,415
  4   Germany, West  132.48        France               1,536
  5   France         126.23        United Kingdom       1,105
  6   United Kingdom 102.67        Italy                1,086
  7   Italy           74.98        China                  697
  8   China, Mainland 68.80+       Brazil                 688
  9   Canada          62.44        Canada                 568
 10   India           44.32        Spain                  558
 11   Brazil          32.90        South Korea            455 
 12   Mexico          26.74        Netherlands            395
 13   Sweden          25.57        Australia              348
 14   Netherlands     25.23        Russian Federation     344
 15   Spain           25.20        India                  324
 16   Poland          24.90+       Switzerland            300
 17   Australia       23.14        Argentina              281
 18 GENERAL MOTORS    22.76        Belgium                269
 19   Germany, East   22.21+       Taiwan                 260
 20   Belgium         20.75        Mexico                 250
 21   Switzerland     17.16        Austria                233
 22   Argentina       16.28        Sweden                 228
 23   Czechoslovakia  15.88+       Indonesia              198
 24   Pakistan        14.55      ITOCHU                   187
 25 STANDARD OIL(NJ)  14.09        Denmark                172
 26 FORD MOTOR        14.08        Thailand               167
 27   South Africa    14.02      GENERAL MOTORS           164
 28   Rumania         13.89+     MITSUI                   163
 29   Denmark         12.39      SUMITOMO                 153
 30   Turkey          11.60      MARUBENI                 145
 31   Austria         11.40        Norway                 145
 32   Yugoslavia      10.57+       Hong Kong              143   
 33   Indonesia        9.60+     FORD                     137
 34 ROYAL DUTCH/SHELL  9.22        South Africa           136
 35   Hungary          9.20+       Saudi Arabia           125 
 36   Venezuela        9.11        Finland                125  
 37   Norway           9.02      MITSUBISHI               125
 38 GENERAL ELECTRIC   8.38      EXXON                    122
 39   Iran             8.28      TOYOTA                   112
 40   Greece           7.55      SHELL                    110
 41 CHRYSLER           7.45        Poland                 102
 42   Philippines      7.21        Portugal               102
 43 I.B.M.             6.89      HITACHI                   95
 44 MOBIL OIL          6.22        Israel                  91
 45   Colombia         6.10        Greece                  90
 46   Chile            5.82      NISSHO                    89
 47   Korea, South     5.82        Malaysia                85
 48   Bulgaria         5.73+       Singapore               83
 49   United Arab Rep. 5.69+       Ukraine                 80
 50   Thailand         5.56        Colombia                76
 51 UNILEVER           5.53        Venezuela               75
 52 TEXACO             5.46        Philippines             74           
 53   Nigeria          5.34      MOBIL                     73  
 54   Portugal         5.01      DAIMLER BENZ              72 
 55   New Zealand      4.86      I.B.M.                    72
 56   Israel           4.67      GENERAL ELECTRIC          70  
 57 GULF OIL           4.56        Chile                   67
 58 U.S. STEEL         4.54      PHILIP MORRIS             66
 59   Peru             4.22      MATSUSHITA                64
 60   Taiwan           4.16      SIEMENS                   62
 61 I.T.T.             4.07      VOLKSWAGEN                62
 62 WESTERN ELECTRIC   4.03        Ireland                 60
 63 STANDARD OIL (Cal.)3.63        Pakistan                60 
 65 DUPONT DE NEMOURS  3.48        Peru                    57   
 66   Malaysia         3.34        New Zealand             57
 67 SHELL OIL          3.32      NISSAN                    56
 68 WESTINGHOUSE ELEC. 3.30      CHRYSLER                  53
 69 BOEING             3.27      A.T.T.                    51
 70 BRITISH PETROLEUM  3.26      UNILEVER                  50
 71 STANDARD OIL (Ind.)3.21      NESTLE                    49
 72 R.C.A.             3.11      TOSHIBA                   48
 73    Algeria         3.00        Egypt                   47
 74    Morocco         3.00        Czech Republic          44
 75    Ireland         2.98      ELF ACQUITAINE            43
 76    Vietnam, South  2.98      SONY                      43
 77 I.C.I.             2.97        Hungary                 43
 78 GEN. TEL. & ELECT. 2.93      DU PONT                   42
 79 GOODYEAR           2.93      NEC                       41
 80 VOLKSWAGEN         2.93      FIAT                      41
 81 BETHLEHEM STEEL    2.86        Algeria                 41 
 82 SWIFT              2.83      PHILIPS                   40
 83    Korea, North    2.82+     HONDA                     40
 84 LING-TEMCO-VOUGHT  2.77        United Arab Emirates    39
 85 UNION CARBIDE      2.69      ENI                       37 
 86 PHILIPS            2.69      RENAULT                   37
 87 GENERAL DYNAMICS   2.66      B.A.T.                    36
 88    Cuba            2.65+     TEXACO                    36
 89 EASTMAN KODAK      2.64      HOECHST                   36
 90 N.A. ROCKWELL      2.64      CHEVRON                   36 
 91 BRITISH STEEL      2.62      GLAXO                     35
 92    Hong Kong       2.57        Romania                 35 
 93 PROCTER & GAMBLE   2.54      BROWN BOVERI              34
 94 INT'L HARVESTER    2.54      MITSUBISHI MOTORS         33
 95 NAT'L DAIRY PROD.  2.43      PROCTER & GAMBLE          33  
 96 UNITED AIRCRAFT    2.41      HEWLETT-PACKARD           32
 97 MONTECATINI/EDISON 2.32      B.M.W.                    32
 98 NATIONAL COAL BOARD2.30      ALCATEL                   32
 99 HITACHI            2.28      BASF                      32 
100 CONTINENTAL OIL    2.25         Morocco                32  
+ 1967, most recent data available
* The indicators used are gross national product for countries and
  gross annual sales for corporations
Source: T. E. Weisskopf "American economic interests in foreign
                         countries: an empirical survey", Center for
                         Research on Economic Development, University
                         of Michigan, Discussion Paper 35, April 1974
as reproduced in M. Todaro, "Economics for a Developing World",
                             Longman, 1977, p. 342
Sources: World Development Report 1997, World Bank, 1997
         World Investment Report 1997, United Nations, 1997
         (Data processed by Dr. Robinson Rojas)
[A] 56 countries and 44 TNCs
[B] 52 countries and 48 TNCs     (out of 133 countries)


The industrial countries are the most important focal point for the
activities of transnational corporations, which is consistent with
textbook economics, because the size of markets (not as number of people
only, but as a combination of the latter with disposable income per
capita) will improve possibilities for maximizing profits.

There are some theories about why companies open up branches in foreign
countries. The most accepted is J. Dunning's 'eclectic theory' (see
   J. Dunning, "The Eclectic Paradigm of International Production: A
                Restatement and Some Possible Extensions", in 'Journal
                of International Business Studies', Vol. 19, No. 1, 1988)

As summarized by `Berry, Conkling and Ray, in "The Global Economy.
Resource Use, Locational Choice, and International Trade", Prentice-Hall
International Editions, 1993, the eclectic theory assumes the following:

1) the host country must offer the TNC some advantage specific to the
   country. These assets may be raw materials or domestic markets. But
   these 'country-specific endowments' or advantages are presumably
   more readily accessible to domestic firms in the host country than
   to the TNC. Therefore, there is a second condition.

2) the TNC must have technologies, patents, or some other 'firm-specific
   advantages' that are relevant to the country-specific endowments of
   the host country. But the TNC could sell these assets to a domestic
   firm in the host country.

3) there must exist, therefore, some market imperfections, which make
   it difficult for the TNC to capture the true market value of its
   firm-specific endowments, and which drive it to internalize these
   assets by operating a branch plant in the host country.

In addition to the above, there other advantages for transnational
operation that apply to all TNCs regardless of their firm-specific

a) protection from trade barriers and exchange rate variations;
b) achieving cross-regional product flows (i.e. "the three major
   world markets, Europe, North America and Japan, tend to demand
   different types of products and to have different images of what
   constitutes luxury. So a TNC can produce regionally for the region
   volume markets and export to the other two regions serving their
   luxury niche. An example is the Honda Accord, marketed as a middle-
   range, high volume automobile in the United States, and sold as a
   luxury product in Japan" (Berry et al, 1993);
c) information about markets developed by superior economic strength
   by TNCs in comparison to local firms;
d) information about business cycles (more often than not, the cycles
   in each region of the Triad, and in individual countries in Europe,
   are not synchronic) could maximize profits for TNCs by use of
   cross-regional product flows;
e) increased local knowledge of the firm, making possible to boost the
   sale of the TNCs products, whether locally produced or imported;
f) a large, stable home market;
g) highly efficient financial markets and transportation and
   communication facilities;
h) "a generally supportive and stable government with a liberal attitude
   towards mergers and industrial concentration" (Berry et al,1993);
i) comparatively low level of taxes and duties, and/or export processing
   zones where manufacturing is free of duties and taxes;
j) access to free-trade zones;
k) to secure supply of raw material, intermediate goods, etc.

The above list assumes that transport costs will cancel advantages such
as huge differential in wages, reduced costs for polluting, and also
assumes that TNCs will not see as advantegous producing low quality
products, or even dangerous products, for foreign markets (i.e. food,
pesticides, fertilizers, medicines, etc)

Thus, even when rate of profits in less  developed societies are higher
for TNCs, the trend will be to invest more in industrial societies.
TABLE 2 and TABLE 3 illustrate this point:
Country group and sector 1974  1975  1976  1977  1978  1979  1980  1981
Developed countries:     13.4  10.9  12.0  11.4  14.0  19.2  16.5  11.5
     Petroleum           11.0   8.5   9.0   8.8   9.7  25.1  26.5  19.8
     Manufacturing       14.0  10.6  12.5  11.8  15.1  18.4  12.4   8.2
     Other               14.2  13.5  13.5  12.9  15.6  16.5  15.7  10.6
Developing countries:    53.6  29.1  25.5  24.9  23.9  32.0  24.3  22.5
     Petroleum          133.3 288.5 124.3 113.6  81.6 144.9  50.7  49.0
     Manufacturing       13.9  13.9  11.5  11.6  15.2  14.3  16.3  12.5
     Other               20.9  18.7  19.8  18.2  18.4  21.2  20.8  18.0
Source: U.S. Department of Commerce, SURVEY OF CURRENT BUSINESS, various
issues. In "Transnational Corporations in World Development. Third
            Survey",United Nations Centre on Transnational Corporations,
            United Nations, 1983
            (in percentages of total -annual average)
                            1970-74 1975-80 1980-85 1985-90 1991-96
WORLD                         100     100     100     100     100

Industrial countries:          80.6    74.1    74.6    82.3    64.8
         European Union        50.0    35.5    30.7    37.1    38.1
         United States         15.2    26.2    37.6    34.3    18.3
         Japan                  0.9     0.6     0.7     0.3     0.6
Developing countries:          19.4    25.9    25.3    17.4    32.3
         Africa                 2.1     3.9     2.8     2.0     1.7
   Latin America/the Caribbean 11.3    14.6    12.1     5.7     9.6
         Asia                   6.0     7.4    10.3     9.5    20.6
           of which:
                    China       0.0     0.1     1.4     1.9     9.9
Central and Eastern Europe      0.0     0.0     0.03    0.3     2.9
sources: "Transnational Corporations in World Development. Third
          Survey", UNCTC, United Nations, 1983
         "World Investment Report 1992. Transnational Corporations as
          Engines of Growth", Transnational Corporations and Management
          Division, United Nations, 1992
         "World Investment Report 1997. Transnational Corporations,
          Market Structure and Competition Policy", United Nations
          Conference on Trade and Development, United Nations, 1997
(Data processed by Dr. Robinson Rojas)

Table 3 is consistent with findings elsewhere that TNCs investment tend
to follow the business cycles. But, more importantly, the figures show
that even when transport costs are decreasing, the share of developing
countries other than China and Central and Eastern Europe is not
increasing desde 1975 (25.8, 23.6, 15.2, and 19.5) and just slowly
recuperating the levels before 1985 -the industrial world was
facing recession during the early 1980s-. 

Probably, it will be adequate to comment here that TNCs investment is
reacting to the "enlargement" of the markets following the opening up
of the former bureaucratic socialist economies to capitalist relations
of production.

Table 4 shows locational tendencies for foreign direct investment
originated in United States, United Kingdom, West Germany and Japan
before 1985.
TABLE 4.- 
         UNITED STATES: Flow of foreign direct investment by sector
                        1970-72 and 1979-81
                      Developed countries      Developing countries
                      1970-1972 1979-1981      1970-1972  1979-1981

Primary industries       60.7      57.7           39.3       42.3
Manufacturing industries 85.0      72.3           15.0       27.7
Services                 57.7      87.6           42.3       12.8
TOTAL                    70.6      73.5           29.4       26.4
         UNITED KINGDOM: Foreign Direct Investment by sector, 1971-78
                                        Flow, 1971-1978
                          Developed countries     Developing countries

Manufacturing industries         81.9                       18.1
Non-Manufacturing industries     81.4                       18.6
TOTAL                            81.7                       18.3
         WEST GERMANY: Outflow of foreign direct investment, 1980
                          Developed countries     Developing countries

Mining                           95.2                        4.8
Manufacturing industries         69.6                       30.4
Services                         94.5                        5.5
TOTAL                            80.7                       19.3
         JAPAN: Outflow of foreign direct investment by sector,
                          Developed countries     Developing countries

Mining                            33.2                    66.8
Agriculture, fishing              40.1                    59.9
Manufacturing                     33.1                    66.9
Services                          62.8                    37.2
TOTAL                             46.0                    54.0
Sources: Table built by Dr. Robinson Rojas with data from tables
         II.08, II.09, II.10 and II.11 in "Transnational Corporations
         in World Development. Third Survey", UNCTC, United Nations,

The case for Japan is unique due to its pattern of industrialization
after the Second World War. There is, nevertheless a trend, if we
take three periods (from the same source above).

JAPAN        Regional Distribution. Foreign Direct Investments.
                           Annual average
                     1951-1966      1967-1977    1978-1980

Developed countries     33.1           43.3         49.4
    of which:
       United States    29.7           24.7         30.8
Developing countries    66.9           56.7         50.6
    of which:
       Asia             18.4           28.9         24.5
       Latin America    28.6           17.6         16.9

Japan's FDI in United States and Asia accounted for 48.1, 53.6 and
55.3 per cent of the total, which indicates heavy geographic
concentration, one led by the need of participate in the wealthiest
market in the world, and the other to secure supply of raw materials
and cheap manufactured goods in Japan's "sphere of influence", which
is East and South Asia.

In 1993, the World Investment Directory commented:

"The rapid growth in cross-border, intra-industry production among
firms based in the most developed regions of the world, driven by
technological and competitive forces, was the most important factor
behind the increased flows of FDI from and into those countries"...
"Among the developed countries, there is a further concentration of
FDI inflows and outflows within the three regions of the Triad (the
European Community, Japan and the United States). For the decade of
the 1980s, approximately 81 per cent of FDI outflows originated within
the Triad, and 71 per cent of FDI inflows were destined for the three
Triad members. The rise to prominence of the Triad is the result of
several factors. The growth of Japan as a significant outward investor
in the 1980s eroded the established positions of the United Kingdom and
the United States, the dominant investing countries in previous decades.
There has been a regionalization of markets in North America and Western
Europe, associated with the free trade agreement between the United 
States and Canada and the pending North American Free Trade Agreement
(NAFTA), and the Single Market Programme of the European Community (EC)
and its extension to the European Free Trade Association (EFTA)
countries to form the European Economic Area. In particular, the
programme to further integrate the EC led to a rise in FDI into the
Community, both between member countries as well as from non-member
countries. In addition, the United States, with the world's largest
internal market and while in the midst of an economic recovery, became
an important recipient of FDI."
..."Traditionally, FDI in a number of industries (armaments, natural
resources, transportation, communications, insurance, financial
services, agriculture and new technologies) has been subject to tighter
restrictions than FDI in general...Within the OECD are in particular, a
process of liberalization and deregulation, targeted primarily at the
services sector, began in the 1970s and continued through the 1980s and
early 1990s, albeit with mixed results. Thus, while most restrictions
have been maintained in some industries such as transportation and
armaments, other industries such as banking and insurance have
experienced significant deregulation, with the effect of opening new
investment opportunities and allowing changing business strategies
across national borders".

Some European voices of protest rose against TNCs investment because
their monopolistic behaviour wasn't seen as positive.

M. Butler, writing in the Financial Times in January 1986, said:

   "I have heard respectable people argue that it does not matter if
European high technology companies are taken over one after the other
by American or Japanese multinationals. If the market so decrees let
no man intervene!
   "This needs to be thought through. The multinationals are in 
Europe TO PROMOTE THEIR PARENT COMPANIES' strategy for gaining world
market share and MAXIMISING THEIR LONG-TERM PROFITS. As part of that
strategy they may do some manufacturing in Europe and even some 
MAJORITY OF THEIR PROFITS FLOW THERE. Once they have knocked out or
taken over the European competition, they are free to shift the 
balance of their investment in plant and research towards home OR TO
OTHER MARKETS YET TO BE CONQUERED. If Boeing in aircraft, or IBM in
information technology, can achieve a still more dominant world 
market share than they have now, THE TEMPTATION TO BEHAVE LIKE
MONOPOLISTS WILL BE GREAT. European industry in other fields will
BRAINS WILL FOLLOW THEM." (Click here for the complete text!)

By and large, the following is considered as the most damaging effect
on the market structure:

1.- the positive correlation between transnational corporation
    activity and industry/market concentration
2.- the impact of foreign direct investment on host-country market
    concentration: effects on concentration at-entry (starting a new
                   unit of production which will elbow out less
                   competitive units of production in the host
                   country), and
                   post-entry effects on market concentration
3.- anticompetitive business practices:
                   monopolizing mergers and acquisitions
                   exclusionary vertical practices ( controlling the
                                                     whole process
                                                     of production)
(see O. Sunkel, "The Transnational Corporate System")
                   predatory behaviour
4.- negative effects on balance of payments mainly due to 'transfer
    pricing' (intra-firm trade to reduce tax payments in host
              countries) (see TABLE 6)
5.- large sectors of FDI are concentrated on polluting industries
6.- as an outcome of the economic power in both their home and
    host countries, TNCs tend to create 'political comparative
    advantage' lobbying governments and even creating, changing and
    toppling down governments. The literature on this is 


World Investment Report 1992 had the following to say about the
"extent of transnational corporation involvement and influence" on
environmental quality:

"...TNCs tend to be more mobile and to have greater discretion in
the location of production than domestic firms, which suggests the
possibility that TNCs have greater leverage in negotiating favourable
environmental regulations, permits and exemptions with host countries.

"...TNCs are extensively involved in environmentally significant
activities. According to a recent UNCTC study ("Climate Change and
Transnational Corporations; Analysis and Trends", United Nations, 1992)
that focused on six major areas that contribute significantly to global
environmental problems and account for roughly 80 per cent of
anthropomorphic greenhouse-gas generation, TNCs have a large influence,
direct or indirect, in those areas. Among other things, they are the
primary producers and intermediate consumers of chlorofluorocarbons,
which are the principal cause of stratospheric ozone depletion and
account for at least 15 per cent of greenhouse-gas emissions. One
chemical company alone, E. I. DuPont de Nemours and Company, accounted
for 25 per cent of world production of CFCs. It has also been estimated
that the 20 largest international presticide manufacturers accounted for
94 per cent of world agrochemical sales in 1990 (UNCTC, "Contribution
of the Commission and the United Nations Centre on Transnational
Corporations to the work of the Preparatory Committee for UNCED", 31
March 1991, E/C.10/1991/3). Furthermore, TNCs are reported to have
extensive involvement in most pollution- and hazard-intensive
industries as measured by environmental control costs (UNCTC, "Environ-
mental Aspects of the Activities of Transnational Corporations: A
Survey", United Nations, Sales No.E.85.II.A.11, 1985)".

"...It is important to note...that the direct involvement of TNCs in
the production process of pollution-intensive industries, even if
adequately measured, provides only an incomplete description of their
role in determining environmental quality. Transnational corporations
exercise considerable influence on environmental variables through a
wide variety of non-equity relationships, which include turnkey and
plant-leasing operations, management contracts, subcontracting, supplier
relations, franchising, licensing, etc. As in direct production, the
non-equity relations of TNCs have positive or negative impacts. For
example, TNCs may choose to avoid responsibility by using subcontractors
for hazardous operations".

"...An early study on United States FDI in pollution-intensive
industries (chemicals, metal, pulp and paper, petroleum refining) found
that such investment went mainly to other industrial countries,
suggesting that United States FDI in developing countries was not mainly
in pollution-intensive industries (H. J. Leonard, "Are Environmental
Regulations Driving United States Industry Overseas? An Issue Report",
Washington, D.C., The Conservation Foundation, 1984)".

Table 5 shows how polluting some activities of TNCs are.
          STOCK (percentage)

          (P) = chemicals, pulp and paper, petroleum and coal
                products, metal
                             Share of (P)      Share of (P)
                             in total FDI      in total FDI
                                               in manufacturing

FRANCE  (1989)                   17                   63
GERMANY, West (1989)             19                   45
JAPAN  (1989)                     8                   31
SWEDEN (1988)                    18                   24
UNITED KINGDOM (1987)            13                   38
UNITED STATES (1990)             19                   42
Source                         1965      1975      1988

Industrial countries            78        78        74
Central and Eastern Europe       5         6         4
Developing countries            17        17        22
TOTAL                          100       100       100
Source: "World Investment Report 1992. Transnational Corporations as
        Engines of Growth", Transnational Corporations and Management
        Division, United Nations, 1992.
        Data processed and reorganized by Dr. Robinson Rojas

Price transfering is a established activity by TNCs, which is achieved
through intra-firm trade. The purpose is to avoid taxation on profits
by the host country. This practice which has been massively researched
for the case of FDI in developing societies, is normally detected when
affiliates of foreign firms tend to import more than what they export,
creating a negative pressure on current account.

A telling example is the data for United States in Table 6.
                         US TNCs           Affiliates of foreign firms
                  All Ind.  Manufacturing     All ind. Manufacturing
Employment (thousands of workers)

1986              17,831.8      10,431.0     2,937.9     1,411.6
1987              17,985.8      10,195.9     3,224.3     1,542.6
1988              17,737.6       9,819.9     3,844.2     1,828.6
1989              18,721.0      10,138.4     4,511.5     2,138.6
1990              18,549.9       9,843.8     4,734.5     2,220.7

EXPORTS (millions of dollars)
1986              162,292       123,046      49,560      12,805
1987              169,239       136,854      48,091      15,487
1988              202,632       164,151      69,541      25,192
1989              223,352       179,885      86,316      31,873
1990              229,427       192,902      92,308      36,069

IMPORTS (millions of dollars)
1986              139,978        77,892     125,732      20,617
1987              156,748        86,616     143,537      24,546
1988              170,804       104,981     155,533      32,762
1989              181,095       110,425     171,847      40,871
1990              199,969       119,707     182,936      47,171
source: E. M. Graham and P. R. Krugman, "Foreign Direct Investment in
                                         the United States", Institute
                                         for International Economics,
                                         January 1995.
Graham and Krugman (1995) comment on the above : "the data reveal a
significant behavioral difference: the affiliates of foreign firms
do show an apparent tendency to export somewhat less and import
significantly more than US firms -indeed, about twice as much".

And they add: "According to the table, in 1990 the typical foreign
manufacturing multinational imported approximately $21,000 worth of
materials per worker versus only $12,000 per worker for domestically
owned firms. In 1990 there were approximately 2.2 million US residents
working for foreign-owned manufacturers. This comparison suggests that
if these firms had remained domestically owned, imports in 1990 at any
given exchange rate would have been approximately $20 billion lower".


Even when globalization, liberalization and deregulation call for a
rolling back of the economic role of governments, there is no ground
to assume that TNCs need to get rid of the state were their parent
offices are. On the contrary, TNCs need their respective states to
build artificial instances of comparative advantage through political/
economic means. TNCs need their home states to shield them against
other TNCs from other states.

World Investment Report 1994 puts it this way:

"The importance of the state in influencing the strategies, structures
and behaviour of TNCs and, therefore, the nature an extent of integrated
international production, lies in its dual role as 'regulator' of
specific activities and as 'container' of specific assemblages of
political, economic, social, cultural and institutional attributes"...
"governments can, and do, create, modify or even destroy comparative and
competitite advantages. In imperfectly competitive markets, first-mover
advantages, externalities and spillovers are still seen to require
governments to intervene in favour of their domestic firms. In some
countries, for example, in the United States, this has led to a growing
demand for a more strategic policy stance. This shift is particularly
evident with regard to high-technology industries that are seen to be at
the centre of a country's competitiveness. Within the broad tendency
towards greater deregulation, therefore, there are significant
differences between individual states. And despite the undoubted changes
that have occurred in its autonomy, the State remains a critical actor
in the organization of the world economy and a major source of continued
unevenness in the extent and form of integrated international

Of course, relative economic, political and military strength of the
states involved in the new carving of the world economy, will pick up
winners and losers like in XIX century and the colonial stage in the XX
century. Tables 1 and 7 give an idea about relative economic power of
industrial societies' states vis a vis the rest of the world.
                         1985-1990   1991-1996
World                       100.0       100.0

Industrial countries         93.2        87.5
      United States          13.9        23.3
      Canada                  3.1         2.3
      Japan                  17.9         8.5
      United Kingdom         16.2        11.3
      Germany                 8.3         8.9
      France                  9.2         9.7
      Netherlands             5.7         5.9
      Belgium/Luxembourg      2.3         2.9
      Sweden                  4.6         2.0
      Switzerland             3.2         3.4
 The above 10 economies      84.4        78.2

Developing countries          6.8        12.5
      China                   0.4         1.1
      Hong Kong               1.3         6.1
      South Korea             0.5         0.9
      Malaysia                0.2         0.5
      Singapore               0.4         0.9
      Taiwan                  1.8         0.9
  The above 6 economies       4.6        10.4
Data processed by Dr. Robinson Rojas from "World Investment Report 1997.
                      Transnational Corporations, Market Structure and
                      Competition Policy", United Nations Conference on
                      Trade and Development, United Nations, 1997
                         PRIMARY SECONDARY TERTIARY

Belgium/Luxembourg          -       83.4     16.6
Denmark                     1.9     29.7     68.4
France                      1.4     32.0     66.7
Germany                     0.1     36.3     63.6
Greece                      7.2     72.7     20.1
Ireland                     2.2     65.0     32.8
Italy                       3.5     38.2     58.3
Netherlands                30.9     22.9     46.2
Portugal                    7.2     38.2     54.6
Spain                       3.6     50.4     46.0
United Kingdom             29.1     36.2     34.7
Austria                     -       56.3     43.7
Finland                     -       45.3     54.7
Norway                     13.2     28.6     58.2
Sweden                      0.1     41.9     58.0

Canada                      4.0     63.3     32.7
United States               3.5     46.8     49.7

Australia                  14.5     29.1     56.3

Japan                       -       63.9     36.1
Primary sector:
       Agriculture, forestry, fishing
       Mining and quarrying
       Coal and petroleum
Secondary sector:
       Food, beverages and tobacco
       Textiles, leather and clothing
       Coal and petroleum products
       Rubber products
       Non-metallic mineral products
       Mechanical equipment
       Electrical equipment
       Motor vehicles
       Other transport equipment
       Other manufacturing
Tertiary sector:
       Distributive trade
       Transport and storage
       Finance and insurance
       Real estate
       Other services

source: "World Development Directory. Developed countries", Volume III,
         Transnational Corporations and Management Division, United
         Nations, 1993
Table prepared by Dr. Robinson Rojas

BOX 1_________________________________________________________________

  Necessary definitions:

a transnational corporation ( or multinational corporation ) is
defined in RROJAS RESEARCH UNIT as a group of corporations that
is operating in different countries but is controlled by its
headquarters in a given country. Transnational corporations
participate in international business -international business can
be defined as those business transactions among individuals, firms,
or other entities {both private and public} that occur across national
boundaries- through channels of entry including exporting, licensing,
franchising, TNC-owned foreign enterprises (joint ventures and wholly
owned subsidiaries), management contracts, and turnkey operations.

    A TNC can manufacture products in a foreign country by signing a
licensing agreement with an independent foreign firm that obtains the
right to produce and sell the product in return for a modest fee.
Franchising involves granting permission to a foreign firm to produce 
a product and to use its name, trademark, or copyright, in return for
a fee and royalties (based on a contract). A TNC may have part 
ownership, which is a joint venture, or complete ownership, which is
a wholly owned subsidiary, of its foreign production and marketing
operations. In a management contract, a company provides managerial
assistance to another company in return for a fee. A turnkey 
operation is an arrangement by which a TNC agrees to construct an
entire facility or plant, prepare it for operation, and then turn
the key over to the local owners, for a fee.

    International business is dominated by the world's major 
industrial countries. The United States is the world's major 
exporter, the major investor, and the major recipient of foreign
direct investment (FDI) (year 1995). The United States' position as the
world's leading foreign investor has weakened over the
years, losing ground to countries such as Japan and regions such as
Western Europe. 
END BOX 1___________________________________________BACK_______________