The Transnational Corporate System in the late 1990's

The Transnational Corporate System in the late 1990's

Transnational direct investment in less developed societies in the 1990s is consolidating further the historical regional spheres of influence by the former colonial powers.

By and large, Latin America, Africa, Asia and Eastern Europe are becoming more than ever "spheres of control of production and trade" by the financial and industrial centers of the world.

Globalization is a task undertaken by the transnational corporate system, and the system has three clear centers (United States, Japan, and the major economies of the European Union). Those centers attract almost totally the flows of international payment to factors of production, creating a financial situation where capital flows from poor societies to rich societies, as it was in the times of colonization and imperial expansion from the 1500s to the 1930s.

The other main characteristic of the transnational corporate system during the 1990s was the speeding up of "mergers and acquisitions" which is one indicator of concentration of capital.

According to 'Financial Market Trends', OECD, July 1997, privatizations were a large contributor to acquisitions: "worldwide receipts from privatizations amounted to a record $88 billion in 1996, of which $68 billion came from OECD countries"...and, the most dramatic fact is that "in many countries, particularly in smaller OECD countries and in the developing world, the sale of public companies to foreign investors has been the primary source of inward investment in recent years". That is, the contribution to new investments has been very small.

'Financial Market Trends' indicates that "global flows of direct investment are dominated by mergers and acqui...

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...rade area. This might occur if the regional integration programme, as designed by its members,incorporates measures that discriminate against firms from outsidethe region. For example, investment incentives for firms from the regiononly; local content levels set at a regional level; and publicprocurement markets that are closed to firms from outside the regionare all examples of measures associated with regional integration thatwould favour member-State firms at the expense of extraregional ones".(Ibid.)

Empirical data for the last 10 years or so point to the formation of the above kind of regional integration, bringing back to the "globalized" world the pattern of "spheres of influence" so familiar to colonial times during XV-mid XX Century, when Western European powers, United States and Japan had their geographically defined hunting grounds for colonial trade.