A brief description of the document on the role of TNCs in the process of internationalization. Transnational corporations and their role in world economic development

Transnational Corporation (TNC)- this is a large significant firm (or an alliance of firms from different countries), which has foreign investments (assets) and has a huge impact on an international scale in any area of ​​the economy (or even several areas).

In foreign international economic literature, such terms as "multinational firms" and "multinational corporations" are often used. It should be noted that these terms are used interchangeably.

There are certain qualitative characteristics of TNCs. They are as follows.

First, these are implementation features. An enterprise (firm) sells an impressive part of its products and at the same time has a significant impact on the international market.

Secondly, these are the features of the location of production. Subsidiaries and enterprises may be located in other countries.

Thirdly, these are the features of property rights. The owners of the enterprise are residents of different countries.

It is enough for any firm to have only one sign to enter the category of transnational corporations. However, it can be emphasized that there are some large enterprises (companies) that have all three of these features at once.

The first one is considered the most important. The undisputed leader according to this criterion at the moment is the Swiss company Nestle. More than 98% of the company's products are exported.

And the other two signs (internationalization of production and ownership) may be absent.

The limit between transnational and conventional corporations in modern society is rather arbitrary, since as the globalization of the economy matures, the internationalization of property markets, production, and sales takes place. That is why researchers use a variety of criteria allocation of TNCs.

The United Nations has its own opinion about TNCs. She first referred to them as companies with branches in more than six countries and an annual turnover of more than $ 100 million. Now the UN refers to transnational corporations those that have the following features:

1) the presence of production cells in at least two countries;

2) centralized management of an economically coordinated policy;

3) active interaction of production cells (exchange of responsibility and resources).

Modern Russian economists distinguish two types of TNCs:

1) transnational corporations whose activities go beyond the borders of the country where their center is located (a kind of "headquarters");

2) transnational corporations, which are a union of national "business organizations" of various states.

TNCs should be distinguished by the scale of their activities. They are small and large. The criterion for such a division is the size of the annual turnover. If small TNCs have mainly three or four foreign affiliates, then large TNCs have dozens, and possibly even hundreds.

An important special kind of transnational corporations are transnational banks (TNB). Their responsibilities include lending activities and organizing cash settlements on a global scale.

In order to more clearly imagine the whole essence of TNCs, it is necessary to pay attention to its development itself. The very first beginnings of TNCs appeared in the 16th-17th centuries. with the development of the colonial New World, when the founders of the British East India Company formed in 1600 were not only English merchants, but also Dutch merchants and German bankers. However, almost until the XX century. similar colonial companies did not play a decisive role in the world economy, since their occupation included exclusively trade, and not production. They can only be called the forerunners of modern TNCs.

In the development of TNCs, it is possible to single out only three main stages.

First stage is the beginning of the 20th century. TNCs invested (mainly in raw materials) in the sectors of underdeveloped economically foreign economies and, first of all, formed purchasing and marketing divisions there. Correcting high-tech industrial production abroad was then unprofitable. On the one hand, in such countries there was no personnel with the necessary qualifications, and the technologies did not reach a high degree of automation. On the other hand, the possible negative impacts of new production capacity on the ability to maintain an efficient level of capacity utilization at the company's former "home" enterprises had to be taken into account. During this period, the subjects of transnationalization were mainly international cartels (associations of firms from different countries). They distributed sales markets, engaged in a coordinated pricing policy, etc.

The second stage in the development of TNCs begins in the middle of the 20th century. This strengthening of the importance of foreign production units is manifested, not only in developing countries, but also in developed countries. Foreign production subsidiaries began to specialize mainly in the production of the same products that were produced in the TNC's "native" country. Little by little, branches of TNCs are changing their specialization, more and more focusing on local demand and the market. If earlier international cartels dominated the world market, now national firms are emerging, quite large ones that are even capable of pursuing an independent foreign economic strategy.

Especially important is the fact that it was in the 1960s. the term "transnational corporations" is born.

Such a rapid growth in the number and importance of TNCs since the 1960s. is largely associated with the influence of the scientific and technological revolution, since the introduction of new technologies and the ease of production operations influenced the fact that it became possible to use low-skilled and semi-literate personnel. At the same time, the potential for spatial separation of individual technological processes appeared. The growth of transport and information communications contributed to the realization of these opportunities. During this period, the manufacturing process became possible. This gave impetus to development while concentrating control over the spatial decentralization of production on a planetary scale.

The current stage is from the end of the 20th century. The main feature of the formation of TNCs is the organization of production networks and their implementation on a global scale. The growth in the number of foreign affiliates of TNCs is much faster than the growth in the number of TNCs themselves. Analysis of production costs plays a key role in choosing where to set up subsidiaries, and these are lower in developing countries. It produces products for which demand is higher. Because of this, for example, the population of modern Germany buys equipment from the German company Bosch, which is not produced in Germany at all, but in South Korea.

The investment flow of transnational corporations has increased in scale and is now increasingly concentrated in the most prosperous regions of the world.

If back in the 1970s. about 25% of foreign direct investment went to developing countries, by the end of the 1980s their number fell below 20%.

The scale of modern TNCs

TNCs have combined international production with world trade. They operate through their subsidiaries and branches in hundreds of countries around the world according to the same financial, scientific and production strategy. TNCs have a colossal market and research and production potential, which ensures a high level of development.

As of the beginning of 2006, there were 68,000 TNCs operating in the world, controlling 930,000 foreign affiliates. For comparison: in 1939 there were only about 30 TNCs, in 1970 - 7 thousand, in 1976 - 11 thousand with 86 thousand branches).

The role of TNCs in the modern world economy is assessed using the following indicators:

1) TNCs account for approximately? world industrial production;

2) they control about 2/3 of world trade;

3) TNC enterprises employ about 10% of all those employed in non-agricultural production;

4) TNCs check about 4/5 of all licenses, patents and know-how available in the world.

The composition of TNCs in terms of their origin over time becomes more and more international. Among the largest firms in the world, of course, American ones predominate.

STATE EDUCATIONAL INSTITUTION

Management department

Department of Economic Theory

COURSE WORK

in the discipline "World Economy"

on the topic "Transnational corporations and their role in the global economy"

Introduction…………………………………………………………………………...3

1. Theoretical concepts of TNCs………………………………………………….5

1.1. TNC: concept, structure……………………………………………………5

1.2. Sources of effective activity of TNCs…………………………..11

1.3. Prerequisites for the formation of TNCs…………………………………………..14

2. Analysis of the activities of TNCs in modern conditions……………………….20

2.1. The modern stage of transnationalization in modern conditions...20

2.2. Consequences of the activities of TNCs for the world economy………………...23

3. The activities of TNCs in Russia…………………………………………………….26

3.1. Investment climate in Russia……………………………………..26

3.2. Russia and TNK……………………………………………………....….…27

Conclusion………………………………………………………………………….31

Bibliographic list……………………………………………………..34

Applications……………………………………………………………………...36

Introduction

Globalization has become the most important feature of the modern world system, in which economic development within the national framework and foreign economic relations are inextricably linked with each other. A characteristic feature of globalization is international flows. Basically, these are the flows of capital and information circulating between transnational corporations (TNCs).

The transnational economy was formed and took shape in the second half of the 20th century, and now its importance for the economy, political and social situation in the world is only increasing. The consequences of the actions of TNCs are increasingly felt by all countries, including Russia, which is moving along the path of integration with the world system.

The world economy today is represented primarily by the transnational economy. The problems of the formation of transnational corporations and the impact on the national and world economy are among the most significant in the context of the intensification of world economic relations. The leading role of TNCs as subjects of international economic relations is recognized by both Western and Russian science.

International corporations, on the one hand, are the product of rapidly developing international economic relations, and on the other hand, they themselves represent a powerful mechanism for influencing them. Actively influencing international economic relations, transnational corporations form new relations, modify their existing forms.

The world's largest TNCs are increasingly penetrating the Russian market. In our country, large Russian corporations are already beginning to emerge and develop - financial and industrial groups (FIGs), which in the future should take their rightful place among the largest TNCs in the world.

The purpose of the course work is to study the role of TNCs in the global economy.

To achieve this goal, it is necessary to solve the following tasks:

To study the theoretical aspects of TNCs;

Consider the prerequisites for the formation of TNCs;

Analyze the activities of TNCs in modern conditions;

Research the investment climate in Russia and the industry specialization of TNCs.

The object of research is transnational corporations as the driving force behind the process of transnationalization. The subject of the study is the dynamics of the development of TNCs.

The documentary and other foundations were based on textbooks on the course of the world economy.

1. Theoretical concepts of TNCs

1.1. TNC: concept, structure

As a rule, the term corporation is used for firms, concerns that operate with the participation of share capital. Corporation - the name of a joint-stock company that has established itself in English-speaking countries.

TNC is a form of international association of capital, when the parent company has its branches in many countries, coordinating and integrating their activities.

The country in which the parent company is located is called the home country. This is usually the country where the corporation originally originated.

A characteristic feature of TNCs is a combination of centralized management with a certain degree of independence of its legal entities and structural units located in different countries (branches, representative offices).

In practice, the following levers of control of the parent company over subsidiaries are used:

dominant share in the authorized capital. In foreign affiliates of TNCs, the share of the parent company is more than 10% of the shares or their equivalent;

possession of the necessary resources (technological, raw materials, etc.);

appointment of personnel to key positions;

information (marketing, scientific and technical, etc.);

special agreements, for example, on the provision of sales markets;

informal arrangements.

TNCs use a comprehensive global business philosophy that provides for the functioning of the company both at home and abroad. Typically, companies of this kind resort in their economic activities to almost all available operations of international business.

Transnational corporations are international companies. They are international in nature of their activities: they own or control the production of products (or services) outside the home country, in different countries of the world, having their branches there, functioning in accordance with the global strategy developed by the parent company. Thus, the "international approach" of TNCs is determined by the role played by foreign operations in all aspects of the economic life of these companies. If in the early stages of this process, foreign production was only episodic, then later it became a significant and even determining factor.

The "multinationality" of the company can also be manifested in the field of ownership. Although the criterion of this "internationality", as a rule, is not property, but capital. Except for a few multinational companies in terms of capital, in all the rest the core of ownership is based on the capital of one, and not different countries.

It should be noted that the criteria for classifying corporations as transnational are currently used and proposed for use:

the number of countries in which the company operates (according to the various proposed approaches, the minimum is from 2 to 6 countries);

a certain minimum number of countries in which the company's production facilities are located;

a certain size that the company has reached;

minimum share of foreign operations in the income or sales of the company (usually 25%);

ownership of at least 25% of "voting" shares in three or more countries - the minimum equity participation in foreign equity capital that would provide the firm with control over the economic activities of a foreign enterprise and would represent foreign direct investment;

the multinational composition of the company's personnel, the composition of its top management.

Thus, it can be seen that the signs of TNCs relate to the sphere of circulation, production and ownership.

The UN, which studies the activities of international corporations, for a long time referred to them such firms that had an annual turnover exceeding $ 100 million and branches in at least 6 countries.

One of the criteria for classifying a company as transnational is the composition of its top management, which, as a rule, should be formed from nationals of various states in order to exclude a one-sided orientation of the company's activities towards the interests of any one country. To ensure the multinationality of the top management, it is necessary to practice recruiting in the countries where the subsidiaries of TNCs are located, and provide them with the opportunity for promotion up to the top management.

Considering that the wording of the concept of "transnational corporation" affects the interests of many states, a compromise version of the definition of the concept of "TNC" in the UN Commission on Transnational Corporations states that a TNC is a company:

comprising units in two or more countries, regardless of legal form and field of activity;

operating within a decision-making system that allows a coherent policy and a common strategy to be implemented through one or more directing centers;

in which the individual units are linked by ownership or otherwise so that one or more of them can have significant influence over the activities of others and, in particular, share knowledge, resources and responsibilities with others.

Organizational management structures of TNCs are directly related to their essential characteristics. Despite the extensive network of foreign branches, representative offices and subsidiaries, TNCs have a specific home country or country of official legal registration of the head office. The top management of the head office is empowered to exercise control over the entire "pyramid" of the company, including its foreign divisions. This gives the control system a rigidly centralized character.

Recently, there have been significant changes in the structure of TNCs, the main of which are related to the implementation of the so-called integrated strategy.

The strategy of TNCs is based on a global approach, which provides for the optimization of the result not for each individual link, but for the association as a whole.

The comprehensive strategy is to decentralize the management of the international concern and significantly increase the role of regional management structures. Such a policy became possible thanks to the achievements of technology in the field of communications and information, the development of national and international data banks, and widespread computerization. It allows TNCs to coordinate the production and financial activities of foreign affiliates and subsidiaries. Comprehensive integration within the framework of TNCs also requires a complex organizational structure, which is expressed in the creation of regional systems of management and organization of production.

Introduction


Conclusion


Introduction

At present, humanity is occupied with the problems of globalization that affect all spheres of human society: economic, social, political, cultural, including the socio-economic and political geography of the world, regions, individual countries and localities. The process of globalization has an objective character, being the inevitable result of the evolution of the world economy, the strengthening of world economic ties. With the formation of the global market, the world system of capitalism and the establishment of the dominance of transnational corporations (TNCs) in it, the concept of the “withering away” of national states as participants in the economic process was put forward. According to this concept, with the growth of giant corporations, "the nation-state as an economic unit is nearing its end." "The economic future of the world is in the hands of large corporations that integrate the world." The culmination of such a process should be "the economic organization of the world under the auspices of large corporations." The "globalizing effect" of technological advances in the field of communications and transport is manifested in an increase in the economic efficiency of the activities of transnational corporations. TNCs combine trade operations and the export of capital, use the benefits of the inter-shop division of labor on a global scale, locating the production of individual components and parts in different countries and concentrating the production of final complex products in one of them. TNCs are new "global entities", the largest of which surpass most of the world's small and medium-sized states in terms of financial, economic and technological potential.

Essence, reasons for the emergence and spread of TNCs. Types of TNCs

According to its main features, a transnational company is an international enterprise. An international enterprise - a transnational corporation - consists of a parent company and foreign branches (subsidiaries and branches). The parent company usually includes the parent holding company and the parent operating company. The operations center holds shares in the foreign affiliates of the company. Control over the firms that are part of an international enterprise is carried out by the so-called financial groups, i.e. informal supra-company associations of firms, involving a certain coordination of actions.
Forms of functioning of the international enterprise TNK:
An international concern is a large diversified association of legally independent enterprises, which are usually headed by a financial institution;
A conglomerate is an association of enterprises that are not industrial organizations. The activity of conglomerates is reduced to the purchase and sale of firms, regardless of the raw materials, technology and the like, and profit from this. The conglomerate includes a wide range of firms, each of which enjoys broad autonomy, that is, it is characterized by decentralized management;
A cartel is an association of enterprises linked by an agreement of a commercial nature. Cartel members retain industrial and commercial independence, limited only by the scope of the agreement. The parties to the agreement assume certain obligations to maintain prices for the agreed type of goods and services, to agree on the share of each in the total production or sales, to delimit the areas of sales. A cartel created for a certain period of time is called a consortium.
The importance of TNCs for the development of the global market economy
The system of international industrial cooperation is currently largely determined by the functioning of TNCs, since these companies, based on fluctuations in supply and demand, move their production from factory to factory around the world, minimize downtime, and extend the life of their products: first, they organize production in their countries, then, as their own market is saturated, they move the surplus product to developing countries and countries with economies in transition (which, in particular, include the Republic of Uzbekistan).
The main features inherent in TNCs:
Annual turnover (sales volume) more than one billion US dollars;
Presence of branches in at least 6 countries;
The share of foreign assets should be 25-30% of the total value of the company's assets;
From one third to one fifth of the total turnover of the company should be accounted for by external operations, that is, sold outside the head office of the TNK.
Causes of TNCs:
Unequal rates of capital accumulation;
Internationalization of production and capital based on the development of productive forces;
Expansion of capital abroad and creation of own branches there;
Striving for super profits;
Fierce competition leading to the concentration of production and capital on an international scale;
Reducing the importance of geopolitical and economic borders.
Types of transnational corporations:
Traditional TNCs are corporations with a parent (parent) company and affiliates in various countries.
Multi-country TNCs are corporations that have a parent (parent) company and relatively independent branches in different countries;
Integrated TNCs are corporations that provide their foreign affiliates with maximum freedom of action, in particular in the field of entrepreneurship;
Network TNCs are corporations that prefer to develop relationships with other companies on the basis of intra-company relationships (sharing the scope of activities and influence), usually included in a consortium.
Organizational structure of TNC management:
The first link is the Chairman of the Board of Directors; Board of Directors elected by the general meeting of shareholders; central services reporting to the Board of Directors. The functions of the first link are: developing a development strategy, budget and investment programs for the corporation, pricing policy, recruiting senior and middle managers, conducting scientific research, monitoring the activities of the company as a whole;
The second link is the regional associations that are subordinate to the Board of Directors. Management is exercised through presidents and vice presidents and their services. They are assigned certain functions (for example, the release of finished products and its marketing), or they are responsible for managing the departments of the corporation grouped according to a certain attribute.
The third link - offices abroad, branches, subsidiaries and associates and their management. Control over the management of each operational unit in the region is carried out by the territorial office of the corporation.

Positive and negative consequences of TNC activities for host countries


Foreign capital, deeply embedded in the economies of many countries of the world, has become an integral part of their reproduction process. The share of enterprises controlled by foreign capital in the total volume of manufacturing in Australia, Belgium, Ireland, Canada exceeds 33%, in the leading Western European countries it is 21-28%, in the USA enterprises controlled by foreign capital produce over 10% of industrial output .
Foreign capital in the form of direct investment plays an even greater role in the economies of developing countries. In them, companies with foreign participation account for about 40% of industrial production, and in a number of countries it prevails.
Studying the geographical structure of foreign investments, it can be established that most of them are in developed countries - both capital exporting countries and receiving countries.
In modern conditions, host countries, both developed and developing, as a rule, approve the activities of transnational corporations on their territory. Moreover, in the world there is competition between countries to attract foreign direct investment, during which transnational corporations receive tax rebates and other benefits.
When choosing a country, transnational corporations evaluate investment conditions according to the following main criteria: assessment of the local market in terms of its capacity, availability of resources, location, etc., political stability in the country, legal conditions for foreign investment, taxation system, nature of trade policy, degree infrastructure development, protection of intellectual property, state regulation of the economy, low cost of labor and the level of its qualifications, stability of the national currency, the possibility of repatriation of profits.
However, there are also a number of problems associated with the activities of transnational corporations in the host country.
The most common misconception about the consequences of the activities of transnational corporations is the opinion that, as a result of the international operations of transnational corporations, one country necessarily wins, while the other suffers losses. In real life, such situations cannot be ruled out, but there are other consequences: both parties can win (or lose). In addition, host countries tend to believe that the profits received by transnational corporations are excessively high. When they receive taxes from multinational corporations, they are convinced that they could receive much more if multinational corporations did not declare their profits in low-tax countries.
The table shows the most typical pluses and minuses for the host country and for the country that exports capital.
All transnational corporations carry out a wide foreign economic expansion.
A significant share of international trade (about 30%) consists of intra-company flows of transnational corporations. They created a specific form of capital transfer through transfer prices (including specially low or high prices) set by transnational corporations themselves when supplying goods and providing services to their subsidiaries and affiliates within corporations (i.e. transactions between branches of the same transnational corporations are carried out at prices that are set by the corporation itself). Therefore, transfer prices for the products of transnational corporations are a very topical issue.
Many transnational corporations are quite large and have monopoly power. Some of them surpass entire countries in terms of turnover, and the heads of such firms often do business directly with heads of state.
Often, transnational corporations, acting in many countries, are able to influence all spheres of public life. And the largest and most powerful corporations are able to evade economic and political control by host states. There have been cases in history when foreign investors won support for their actions from the political leadership, regardless of their consequences for the local population and the welfare of the country as a whole. Often, under pressure from the government of the host country, transnational corporations leave this country and move to another - with a more loyal government.
It is necessary to note the main negative features of the impact of transnational corporations on the economy of the host country:
the danger of the host country becoming a dumping ground for obsolete and environmentally hazardous technologies;
capture by foreign firms of the most developed and promising segments of industrial production and research structures
host country. Transnational corporations, possessing even in moments
shocks with large financial resources, they actively use the bad market conditions to capture other firms;
the possibility of imposing unpromising directions on the companies of the host country in the system of division of labor within the framework of transnational corporations;
the orientation of transnational corporations to absorption entails an increase in the instability of the investment process. Large investment projects associated with real capital investments are distinguished by a certain stability - they cannot be started without lengthy preparation and suddenly completed without impressive losses. Conquest politics, on the other hand, presupposes financial mobility;
the stable position of transnational corporations gives them the opportunity to take more decisive measures in case of crises - the closure of enterprises, the reduction of production, which leads to unemployment, etc. negative events. This explains the phenomenon of disinvestment (mass withdrawal of capital from the country);
the propensity of transnational corporations to overreact to changing market conditions gives many reasons to reduce output if the competitiveness of a given state is reduced for one reason or another.
While the impact of foreign investment inflows on the host economy can be controversial, the enormous positive economic impact of transnational corporations cannot be discounted.
The influx of foreign investment contributes to the development of intra-regional trade, since branches of foreign companies satisfy a significant part of their needs for materials, components and equipment through imports from the investor country. Transnational corporations undermine the position of local monopolies and, despite their large size, often increase the degree of competitiveness of national markets. Through foreign direct investment, transnational corporations move large production resources across national borders. By moving productive resources from countries where they are in abundance to countries where they are deficient, transnational corporations contribute to a more efficient distribution of the world's factors of production and, as a result, the growth of production in the world. The global community benefits from a more efficient allocation of resources by moving skilled labor, capital, technology, and so on from country to country. This is where the views of almost all international economists converge.
Transnational corporations operate through their subsidiaries and branches in dozens of countries around the world according to a single scientific, production and financial strategy formed in "think tanks". They have a huge scientific, industrial and market potential, which ensures high dynamism of development.
Transnational corporations have demonstrated their ability to break the isolation of national economies by involving them in a single process with the world economic community. They serve as the most important means of transferring new technologies, disseminating information about new products, as a result of which public preferences change. In the context of increased international competition, an important direction in the development of transnational corporations has become the formation of mixed companies with the participation of local capital, which accelerates the concentration of capital. The participation of local shareholders creates an opportunity to take into account their interests, although the most important decisions are taken by the headquarters. At present, the export of capital is carried out not only by the leading industrial countries. It is also exported from the industrialized countries of Asia and Latin America (Taiwan, South Korea, Singapore, Brazil). The largest companies in these countries export capital in order to expand their areas of activity, use labor resources or scientific and technological achievements of the host countries to extract higher profits. The patterns of development of transnational corporations differ significantly from the patterns of development of the bulk of national firms.
Among the main trends in their development are the following:
a slight reduction (or no reduction) in the turnover of transnational corporations during periods of crisis, their independence even from long-term depressive phenomena in certain industries;
transnational corporations have the opportunity to succeed regardless of the state of the national economy;
from improving domestic conditions transnational corporations
receive less gain.
Thus, companies with an international character become largely independent of the developments in individual countries, and the success of transnational corporations does little to help the national economy. That is, a typical feature of a hypothetical "TNK-economy" is a sharp contrast between the well-being of the largest companies and the serious difficulties of the country's economy as a whole - unsustainable development of production, inflation, insufficient investment, mass unemployment.
The development of international production is associated not only with direct investment, but also with a number of other forms of international cooperation:
licensing agreements that enable multinational corporations to participate in the affairs of foreign companies and receive profits and royalties for the use of a patent;
management agreements, under which multinational corporations arrange for the management and maintenance of foreign companies in exchange for a fee and an equity stake;
international subcontracting, in which multinational corporations enter into subcontracts with foreign companies for the performance of special works or the supply of certain goods.
It is necessary to pay attention to another factor that clearly illustrates the trend of the internationalization of the economy.
The new economic structure gives rise to supranational political institutions and international organizations corresponding to it - such as the World Bank for Reconstruction and Development, the International Monetary Fund, etc. As a result, a peculiar situation of dual power arose. Sovereign states have to first share power in the economic and then in the political sphere with the above organizations. At the same time, the influence of states is waning, and power is increasingly passing into the hands of transnational corporations and international institutions controlled by them.

Conclusion

One of the means of state financing of the exports of the developed capitalist countries is economic "aid" to foreign states. It facilitates commercial relations between local firms and Western corporations, since all operations for the implementation of the "aid" program are carried out by monopoly capital.
TNCs conduct their transactions on the basis of developed global strategies, linking national and regional ones and ensuring the integrity of international production.
But, at the present stage, TNCs occupy not only a global economic niche, but also a political one. The process of globalization occurs through TNCs, their financial role in developed and developing countries. Often in the latter, the conditions for their development are dictated through TNCs. An important role is also played by financial institutions that support the growing globalization.
Having considered the negative aspects of the international activities of TNCs, the question involuntarily arises: what to do next?
One of the ideologists of the radical wing of the anti-globalization movement, Walden Bello, argues that international institutions and TNCs are “unreformable”, therefore it is necessary to challenge and undermine their power, delegitimize them and ultimately achieve their elimination by demonstrating “manpower”. This is, of course, a maximalist idea, it is unrealistic and counterproductive - no matter what excuses are made. However, Walden Bello's alternative plan contains many sound ideas, such as when he says that developing countries should focus their economies primarily on the domestic market and not on exports; contribute in every possible way to the development of the domestic market; to encourage production at the communal and national level, directing most of the financial resources to domestic development; support both private and cooperative and state enterprises; not to chase indicators of economic growth, but to maximize the principle of fair distribution in order to radically improve the environment; adhere to the democratic procedure for making economic decisions, not yielding to the dictates of the market, etc.

In the opinion of many economists who are currently dealing with the problem of globalization, this is the most constructive solution. But will TNCs agree to this? TNCs have already proven their ability to break the isolation of national economies, to involve them in the process of integration with the world economic community.

Bibliography

1. "World Economy" edited by A.S. Bulatov - Moscow: Enlightenment, 2000.
2. "International Economics and International Relations" No. 10, 2000.
3. "International Economics and International Relations" No. 12, 2001.
4. World economy: Proc. Manual for universities / Ed. Prof. I, P, Nikolaeva. - 2nd ed., revised. and additional - Moscow: UNITY-DANA, 2002

Similar content

This section provides answers to the question: What is the role of transnational corporations in the global economy? Advantages and disadvantages of TNCs?

The role of TNCs. Advantages and disadvantages

The subsection examines the advantages and disadvantages of TNCs, their impact on the world economy, the role of TNCs in the world economy.

Transnational companies, represented in many countries of the world, are able to influence all spheres of public life.

TNCs contribute to the development of scientific and technological progress, since within their framework scientific and technical work is carried out, new technologies appear in order to improve production.

Many transnational corporations have monopoly power. Some of them have a turnover so high that they surpass many countries.

International corporations stimulate the trend of globalization of the world economy by involving countries in international economic relations.

Stimulate the development of world production. Because TNCs create more and more new products, expand the scale of their activities, thanks to which more and more jobs appear, which helps to reduce unemployment in the country.

TNC contributes to the optimal distribution of resources and the location of production.

Contribute to the expansion of the boundaries of international cooperation.

Transnational companies influence not only the formation of the economy as a whole, but also the economy of individual countries. International companies for each individual state are the subjects of the world economy and must act in accordance with the laws of each country.

The activity of TNCs in a competitive environment shows the competitiveness of the country it represents. That is, the prosperity of the country largely depends on the success of companies operating on its territory and being international. Companies that produce products that are competitive on the world market and are mainly export-oriented contribute to the strengthening of the country's foreign trade position.

For countries, the functioning of TNC branches and companies is good because those goods that previously had to be imported are now available thanks to the activities of international corporations. Therefore, there is no need to import.

TNC employees can move from country to country and still work for the same company.

In the activities of international corporations, unfortunately, there are not only advantages, but also disadvantages. We will now consider them.

First, TNCs are highly competitive, as a result of which it is simply impossible for domestic production to break into the market.

Secondly, the capture by foreign firms of the most developed and promising segments of industrial production and research structures of the host country.

Thirdly, it happens that subsidiaries of TNCs violate national legislation by hiding part of their income from taxation.

Fourthly, the establishment of monopoly prices, the dictatorship of conditions that infringe on the interests of the host countries.

Fifth, transnational companies can quite easily move their capital between countries. For example, in an unfavorable situation in the country, a TNC can transfer its capital to a country with the most prosperous situation, as a result of which the former will have even greater difficulties.

In turn, TNCs choose the most preferred countries for them, most often these are developed countries. The reason for this is that the export of capital and the organization of production abroad further increase the competitiveness and power of corporations whose activities are based on the use of the scientific, technical and organizational process, and the export of capital, as you know, is aimed at developing new capacious markets.

TNK is constantly developing a network of its foreign branches, trying to cover, if not the whole world, then at least its significant areas. The number of agreements between several companies on scientific and technical cooperation is growing rapidly, which should further strengthen their competitive positions.

Also, the basis of competitiveness is that TNCs control the entire production process: from raw materials to the sale of finished products. This allows the most efficient development of the international division of labor and the creation of highly efficient combinations of production.

The constant improvement of technology and the development of scientific discoveries requires huge costs, but this is a necessity for the functioning of TNCs. However, for many TNCs, this is one of the problems on the way to the efficient operation of production.

Some believe that multinational companies have a negative impact on the world economy, some on the contrary, that they have a positive impact on it. As for my personal opinion, TNCs are essential elements in the process of formation of the world economy. And although there are a number of negative features of TNCs, all these disadvantages cover quite large pluses. Transnational corporations have a beneficial effect on international relations, primarily on the state of international security, as they contribute to the development of interdependence of various states, making any aggression of countries connected by the system of transnational corporations unprofitable.

The significant role of transnational corporations in the modern world has been established. TNCs are able to influence all spheres of public life: they stimulate the trend of globalization of the world economy, promote the growth of scientific and technological progress, stimulate the development of world production, help expand the boundaries of international cooperation, etc.

TNCs can influence both the economy as a whole and the economy of an individual country.

The advantages and disadvantages of TNCs are revealed, but their irreplaceable role is proved. As a result, it can be said that TNCs cannot be viewed only from a negative or only from a positive point of view, their activities play a crucial role in shaping the economy.

The main strategic goal of TNCs is not only profit maximization, but also the creation of conditions under which, under their influence, the future policy of world economic relations will be formed. This factor contributes to the creation of an integrated international production system in which, according to UN experts, the share of TNCs in the total volume is more than 30. The relevance of this topic today is explained by the growing contribution of TNCs to the development of the world economy and the increasing share of participation in world socio-economic processes...

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