capitalism Flashcards
what are transnational corporations?
any corporation that’s registered and operates in more than one country. has its headquarters in one and operates or partially owns subsidiaries in 1+ countries
not all corporations are transnational- although they operate in multiple countries…
they don’t have much FDI
foreign direct investement
an investment in a business by an investor in another country for which the foreign investor has complete control over the company purchased.
what was the historical trend for FDIs?
in the 90s, FDI’s went to other rich countries but now its to developing countries
which developments allowed the rise of corporations?
- technological change
- policy liberalization
- increasing competition
product life cycle theory by vernon
- innovative product becomes produced in a developed country because it requires capital
- a cheaper version is created in a developing country (mature product)
- mass production- as technology gets easier to produce, its no longer innovative (standardized)
appropriability theory by caves
you want to sell your product to the chinese market but you can’t give it to a Chinese company because they may steal it. so you open a branch in China and invest money there.
the theory explains why corporations open branches– because they’re afraid that theft will lead to competition in the market.
branch factory syndrome by hymer
because TNC’s aren’t transferring intellectual property abroad- they’re preventing their economies from developing. there’s no beneficial effect of having a TNC in your country- you’re just a cheap source of labor for them
TNC strategies
1/ branch factory syndrome
2/ politics and protectionist barriers
3/ currency instability
4/ global competition
politics and protectionist barriers
if eu has high tariffs for japanese cars, the manufacturer can do everything in japan but assemble the car in germany to sell its product more and pay less taxes
currency instability
delocalizing some parts of your products into the country where you want to sell it allows you to not get affected from currency differences
global competition x tnc strategies
some countries cut taxes to attract companies like cayman islands
agents of capitalism - lenin
capitalism needs imperialism to survive, even if it doesn’t invade countries, they should extract resources
agents of western hegemony - gilpin
US corporations have participated to the global hegemony of the US - underpinning idea: TNC’s aren’t just businesses
stopford and strange - triangular diplomacy
- state-state
- firm-state
- firm- firm
footloose corporations
corporations move territory- where the taxes are better
what is dependency? - evans
a situation in which the rate of accumulation are externally conditioned
what is dependent country? - evans
one whose development is conditioned by the development of another economy.
core-periphery-semiperiphery by evans
relation isn’t from nation to nation but from center elite to dependent elite - also inside a country too
disarticulation and exclusion- evans
center extracts primary resources or exports technology that doesn’t benefit the dependent country
products imported from the center are the rich elites
capital intensive technologies in modern sector marginalize masses of producers.
a company will only build a road leading to the resources, not anywhere else
exclusion from the economy for the masses- they are paid so less that they can’t benefit from the development or buy the products they produce
“transnational corporations aren’t just profit making firms” - evans
- they remove control over production
2. they extend alienation across boundaries
“transnational corporations reinforce disarticulation” - evans
- they develop infrastructure that benefits them
- they keep knowledge and tech to the center
- products are aimed at dependent elites
the state in dependent development - evans
the state plays a key role in dependent countries. unless the state intervenes, there’s no effective sponsor for peripheral development
they must deal with tnc’s as “Internal foreign policy”
