8 - Multinational Corporations

8 - Multinational Corporations - #8 MNCs 1 Multinational...

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#8 MNCs 1 Multinational corporations (MNCs) By Paul Alexander Haslam Negative view of them, but some support local communities and econo. dev. = polarizing - Goal of the text: present a balanced picture of MNCs MNCs are drives of globalization WHAT IS A MULTINATIONAL CORPORATION? (P. 45) Different terminologies: - Multinational corporations: MNCs = used in social science - Transnational corporations: TNCs = UN system - Multinational enterprise: MNE = international business studies - Foreign direct investment : FDI = economists - Direct investment = physical presence (buildings, techno, labour), more stable - Indirect invest. = foreign portfolio invest. (hot capital flows) (purchase of debt, loans, stock marjet) Definition of MNC An “enterprise that engages in FDI and owns or controls value-adding activities in more than one country 2 distinctive features: 1. “coordinates value-adding activities across national borders” 2. “ internalizes the cross-border transfer inputs used in the production process” (≠ market) Variation of size and internationalization Top 100 MNCs = concentrated, growing faster than the others, most from the developed countries FDI Developing countries received les FDI than developed ones FDI = most important source of new money for developing countries FDI is concentrated in 5 dynamic and industrialized developing countries (Brazil, China, Hong Kong, Mexico and Singapore) o But FDI figures don’t indicate new productive investments vs Mergers and acquisition (transfer of $ to buy a local company) o Foreign invest. figures may include domestic invest. o So, these figures may be misleading (impact of FDI on development) WHAT MOTIVATES MULTINATIONALS TO GO ABROAD? (p. 47) 3 approaches 1- A critical approach inspired by Marxism 2- The mercantile or nationalist approach 3- The liberal or international business approach
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#8 MNCs 2 1- Dependency and critical approach MNCs = representatives of the global capitalist system = negative for developing countries Dependency theory: MNCs have a role in maintaining underdevelopment o Prebisch: trade-based explanation o Marxism: role of MNCs in organizing this trade relationship o Baran: Intl division of labour (IDL): high-value manufacturing = core, commodity and resource extraction = periphery → underdev. $ send back North. New IDL (NIDL): MNCs manufacturing in 3nd world because of low-cost labour, high-value-added manufacturing in developed countries MNCs + local elites to defend the existing social order → Impacts: change how countries (elites) see their interests. “Autonomous” local dev. is impossible Industrialization for external agents = choice that are dysfunctional for local dev. “Associated dependent development” (Cardoso and Faletto)
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This note was uploaded on 10/09/2010 for the course INTD 200 taught by Professor .. during the Fall '09 term at McGill.

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8 - Multinational Corporations - #8 MNCs 1 Multinational...

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