Transnational Corporations Flashcards
Definition of TNCs
TNCs are corporations operating in more than one country simultaneously, also known as multinational corporations.
Importance of TNCs
Represent approximately 25% of global GDP.
Contribute to 1/3 of world exports.
Possess a significant share of global wealth.
Total of 103,000 TNCs with 892,000 affiliates.
Ranking TNCs
Ranking based on market capitalization.
Examples include Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla, Saudi Aramco, Tencent, Alibaba.
Not All TNCs are Transnational
Some involved in supermarkets, healthcare, might be corporations but not necessarily transnational.
Rise of TNCs
Growth of Foreign Direct Investment (FDI).
Policy liberalization and free trade agreements.
Technological change facilitating remote management.
Increasing competition due to policy liberalization and saturated local markets.
Patterns of TNC Operations
Only 17% of FDI in developing countries in 1990 increased to 53% in 2011.
Explaining TNC Behavior
Product Life-Cycle Theory (Vernon):
Three phases explaining the trade reversal of tech products.
Example using the development and maturity of Apple iPhone.
Appropriability Theory (Caves):
Explains why firms invest abroad.
Firms with products involving high degrees of research fear counterfeiting.
Going transnational helps maintain control over R&D and licensing.
TNCs and the State
TNCs Strategies:
Hymer’s “Branch Factory Syndrome” suggests TNCs may not contribute to the diffusion of tech and knowhow.
Political and protectionist barriers, currency instability, location-specific advantages, and global competition strategies.
TNC and Imperialism (Lenin):
Definition of imperialism according to Lenin.
TNCs as potential agents of imperialism and Western hegemony.
TNCs as State-Level Actors:
Stopford and Strange’s “Triangular Diplomacy” - TNCs possess not only economic power but also political power in local markets.
“Footloose” corporations vs. territorialized states - TNCs can relocate business easily, while states find it challenging to reject or relocate them.
Dependency Theory Definition of Dependent Country
“One whose development is conditioned by the development and expansion of another economy” (Dos Santos, 1970).
Dependency Theory Definition of Dependence
A situation in which the rate and direction of accumulation are externally conditioned.
Center, Periphery, Semi-Periphery
Distinction between core, periphery, and semi-periphery nations.
Relationship is from center elite to dependent elite (bourgeoisie, agrarian owners).
International Product Life Cycle
Conceptual framework explaining the development of selected dependent countries, particularly in the semi-periphery.
Disarticulation & Exclusion
Center extracts primary resources or exports technology that doesn’t benefit the dependent country.
Products from the center benefit the rich elites, marginalizing the masses in the periphery.
Transnational Corporations (TNCs) in Dependency
Definition of TNCs:
Organizational embodiment of international capital.
Not just profit-making capitalist firms but entities that remove control over production and extend alienation across political boundaries.
Reinforcing Disarticulation:
TNCs develop infrastructures that primarily benefit them.
Keep knowledge and technology in the center.
Products are aimed at dependent elites.
State in Dependent Development
Key Role of the State:
Essential in dependent countries for effective sponsorship of peripheral industrialization.
Intervenes to address issues related to TNCs’ “internal foreign policy.”
State’s Relationship with TNCs:
Must coerce or cajole TNCs for the benefit of the local bourgeoisie.
Repression and Maintenance of Benefits:
The state may use repression to preserve the benefits of the local bourgeoisie, contributing to disarticulation and exclusion of the masses.
