Planning for development: integrated international system of production
and power elites.
Editor: Róbinson Rojas Sandford |
19
September 2011
The network of global corporate control
Stefania Vitali , James B. Glattfelder , and Stefano Battiston,
Chair of Systems Design, ETH Zurich, Kreuzplatz 5, 8032 Zurich, Switzerland
Abstract
The structure of the control network of transnational corporations affects global market competition
and financial stability. So far, only small national samples were studied and there was
no appropriate methodology to assess control globally. We present the first investigation of the
architecture of the international ownership network, along with the computation of the control
held by each global player. We find that transnational corporations form a giant bow-tie structure
and that a large portion of control flows to a small tightly-knit core of financial institutions.
This core can be seen as an economic “super-entity” that raises new important issues both for
researchers and policy makers.
Read also:
Revealed - the network that run the world
From the New
Scientist, 24 October 2011
The idea that a few bankers control a large chunk of the global economy might
not seem like news to New York's
Occupy Wall Street movement and protesters elsewhere.
But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich,
the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics
long used to model natural systems with comprehensive corporate data to map ownership among the world's
transnational corporations (TNCs).
On
power elites
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From UNU-WIDER working papers series 2010
Elise S. Brezis
Globalization and the Emergence of a Transnational Oligarchy
The aim of this paper is to examine the evolution of recruitment of elites due to
globalization. In the last century, the main change that occurred in the way the Western
world trained its elites is that meritocracy became the basis for their recruitment.
Although meritocratic selection should result in the best being chosen, we show that
meritocratic recruitment may actually lead to class stratification and auto-recruitment.
In this paper, I show that due to globalization, the stratification effect will be even
stronger. Globalization will bring about the formation of an international technocratic
elite with its own culture, norms, ethos, and identity, as well as its private clubs like the
Davos World Economic Forum. We face the emergence of a transnational oligarchy.
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From UNU-WIDER working papers series 2010
William I. Robinson
Global Capitalism Theory and the Emergence of Transnational Elites
The class and social structure of developing nations has undergone profound
transformation in recent decades as each nation has incorporated into an increasingly
integrated global production and financial system. National elites have experienced a
new fractionation. Emergent transnationally-oriented elites grounded in globalized
circuits of accumulation compete with older nationally-oriented elites grounded in more
protected and often state-guided national and regional circuits. This essay focuses on
structural analysis of the distinction between these two fractions of the elite and the
implications for development.
I suggest that nationally-oriented elites are often
dependent on the social reproduction of at least a portion of the popular and working
classes for the reproduction of their own status, and therefore on local development
processes however so defined whereas transnationally-oriented elites are less dependent
on such local social reproduction. The shift in dominant power relations from
nationally- to transnationally-oriented elites is reflected in a concomitant shift to a
discourse from one that defines development as national industrialization and expanded
consumption to one that defines it in terms of global market integration.
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From UNU-WIDER working papers series 2010
Jurgen Brauer and Robert Haywood
Non-state Sovereign Entrepreneurs and Non-territorial Sovereign
Organizations
We propose two new concepts, of non-state sovereign entrepreneurs and the nonterritorial
sovereign organizations they form, and relate them to issues pertaining to
state sovereignty, governance failures, and violent social conflict over the appropriation
of the powers that accrue to states in modern international law. The concepts deal with
the rise of transboundary non-state actors, as they impinge on and aim to supplement or
supersede certain powers of state actors. We provide examples to show that non-state
sovereign entrepreneurs and their organizations already exist. We are interested in their
potential role in conflict transformation.
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WORLD INVESTMENT REPORT 2011
Non-equity modes of international production and development
Cross-border non-equity modes (NEMs)
of international production generated at least $2 trillion in sales
globally in 2010 and are growing rapidly, shaping world trade and
investment patterns, with important implications for development...
...international production is not exclusively about foreign direct
investment (FDI) on the one hand and trade on the other. NEMs - which
include contract manufacturing, services outsourcing, contract farming,
franchising, licensing, and management contracts - allow transnational
corporations to coordinate activities in their global value chains and
influence the management of host-country firms without owning equity
stakes in those firms. Transnational corporations manage the activities
of NEM partner firms in their global value chains - for example, a local
company in a host country assembling a product or providing information
technology (IT) support - through contracts or, equally important,
through access to transnational corporations´ technology, skills,
business models or internal markets. Transnational corporations seldom
take equity stakes in NEM partner firms, although the partner firms are
tied to the transnational corporations´ global networks.
...UNCTAD...cites concerns about the impact of NEMs in host developing
economies. For example, working conditions may be poor, particularly in
the case of contract manufacturing in labour-intensive activities, since
NEM partner firms are under strong competitive pressure to reduce costs.
In some instances, NEMs can be used to circumvent social and
environmental standards. The report also points to pitfalls for
long-term industrial development: Developing countries need to mitigate
the risk of remaining locked into low value-added activities and need to
avoid overdependence on foreign technologies and inputs.
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Transnational corporations and integrated international production
UNCTAD: World Investment Report 1993
Transnational corporations are a powerful force for binding national economies together.
Through complex corporate strategies and intricate network structures, transnational corporations
engage in international production characterized by a sophisticated intra-firm division of labour for each
corporate function. As a result, they create an integrated international production system which places
about one third of the world's private sector productive assets under the governance of transnational
corporations. The World Investment Report 1993: Transnational Corporations and Integrated
International Production, prepared by the United Nations Conference on Trade and Development
(UNCTAD) Programme on Transnational Corporations (formerly the United Nations Centre on
Transnational Corporations)--the third in an annual series of reports on transnational corporations and
foreign direct investment--provides an analysis of the changing activities of transnational corporations
and their impact on world-wide economic change. The major findings of the Report are summarized
below.
Table of contents -
Preface -
Overview
Chapter I -
Global Trends -
A. Trends -
B. The universe of transnational corporations -
C. The policy framework
Chapter II -
Regional Trends -
A. Developed countries -
B. Developing countries -
C. Central and Eastern Europe
Chapter III -
Sectoral Trends -
A. Overall trends -
B. The primary sector -
C. The secondary sector -
D. The tertiary sector -
E. Conclusions
Chapter IV -
The growth of foreign direct investment in the 1980´s: The bulge in the trend -
A. Short term factors -
B. Policy changes -
C. Structural factors -
D. Future prospects
Chapter V -
Strategies of transnational corporations -
A. The functional scope of international production -
B. The geographic scope of international production -
C. Conclusions
Chapter VI -
Organizational structures of transnational corporations -
A. Structures of transnational corporations under complex strategies -
B. Integrated international production at the firm level -
C. Conclusions
Chapter VII -
Integrated International Production and its implications -
A. The characteristics of the system -
B. The geographic structure of integrated international production -
C. Implications for host countries
Chapter VIII -
Corporate Nationality -
A. The grounds of corporate nationality -
B. Corporate nationality: where and how it matters -
C. Integrated international production and corporate nationality -
D. Towards more order and clarity -
E. Looking ahead
Chapter IX -
Parent-Affiliate relations and responsibilities -
A. The parent-affiliate dichotomy -
B. National legislative and judicial approaches -
C. Options for consideration -
D. Public opinion and corporate good will -
E. Conclusions
Chapter X -
Tax Policy -
A. Problems of allocating business income -
B. Income allocation in an integrated international production system -
C. Alternative methods for dealing with the allocation of income -
D. Some implications for tax policy
Chapter XI -
Investment Policies -
A. Competition for investment and the convergence of investment policies -
B. Investment policies in developing countries -
C. International production, competitiveness and systemic convergence
References
Annex Tables:
Table 1: Foreign-direct-investment inward flows, by region and economy, 1981-1991
Table 2: Foreign-direct-investment inward and outward stock, 1980, 1985 and 1990
Table 3: The ratio of foreign-direct-investment inflows to gross domestic capital formation
and the ratio of gross domestic capital formation to gross domestic product,
1971-1975, 1976-1980, 1981-1985, 1986-1991
Table 4: Average annual inflows of foreign direct investment to the
Ten largest developing economies, 1970-1980, 1981-1991
Table 5: New bilateral treaties for the promotion and protection of foreign direct
investment signed or entered into force in 1991 and 1992
Table 6: Changes in main national legislation relating to foreign direct investment in 1992
Table I.10: The largest 100 non-financial transnational corporations, ranked by foreign assets, 1990
Select list of publications of the UNCTAD Programme on Transnational Corporations
Questionnaire
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From UNCTAD
World Investment Report 1997:
Transnational corporations, market structure and
competition policy:
In contrast to what might be expected when FDI and trade become freer and expand together,
globalization may well increase concentration"...and this process may be accentuated
by integrated international production. Integrated International Production will generate
barriers for developing countries attempting independent planning for development.
Chapter V. Policy implications
"
There are four main types of business practices that can have anticompetitive effects: practices
undertaken by a single firm (when a firm enjoys a dominant position); anticompetitive mergers and
acquisitions; horizontal restraints (i.e., arrangements between competitors to restrain competition) and
vertical restraints (anticompetitive arrangements between firms along the production-distribution chain).
Horizontal and vertical restraints include the following arrangements, which can be undertaken individually
or in combination:
Horizontal restraints
(these may take the form of domestic cartels, import cartels, export cartels and international cartels).-
Price fixing: Competing suppliers enter into cooperative agreements regarding prices and
sales conditions.
Restraint of output: Competing suppliers enter into agreements regarding output and product
quality.
Market allocation: Competing suppliers allocate customers amongst themselves, who therefore
cannot benefit from competition by other suppliers.
Exclusionary practices: Competing suppliers employ practices that inhibit or preclude the ability of
other actual or potential suppliers to compete in the market for a product.
Collusive tendering: Competing suppliers exchange commercially sensitive information on bids
(bid-rigging) and agree to take turns as to who will make the most competitive offer.
Conscious parallelism: Competing suppliers generally set the same prices, but without an explicit
agreement.
Other restraints: Generally characterized by suppliers entering into cooperative agreements
competition not to undertake certain actions of competitive value (e.g., advertising).
Vertical restraints.-
Exclusive dealing: A producer supplies distributors and guarantees not to supply other
distributors in a given region.
Reciprocal exclusivity: A producer supplies on the condition that the distributor does not carry
anybody else’s products.
Refusal to deal: A supplier refuses to sell to parties wishing to buy.
Resale price maintenance: A producer supplies distributors only on the condition that the distributor
sells at a minimum price set by the supplier.
Territorial restraint: A supplier sells to distributors only on the condition that the distributor does
not market the product outside a specified territory.
Discriminatory pricing: A supplier charges different parties different prices under similar circumstances.
Predatory pricing: Suppliers sell at a very low price (or supply intermediate inputs to competitors
at excessive prices) in order to drive competitors out of business.
Premium offers: A dominant supplier offers discounts or other inducements only to certain
loyalty rebates parties on the condition they do not sell someone else’s products.
Tied selling: Producers force purchasers to buy goods they do not want as condition to sell
them those they do want, or force resalers or wholesalers to hold more goods
than they wish or need.
Full-line forcing: A supplier requires distributors, for access to any product, to carry all of the
supplier’s products.
Transfer pricing: May involve over-invoicing or under-invoicing of intermediate inputs between
foreign affiliates. Under -invoicing can be used to facilitate predatory pricing."
Introduction
A. Investment liberalization
1. Liberalization of entry and operations -
2. Limiting market-power inducements -
(a) Assessing costs and benefits -
(b) Minimizing anticompetitive effects
B. The interface of foreign direct investment and competition law
1. The growing emphasis on competition law - -2. Main elements of competition law -
3. Competition law and foreign direct investment -
(a) At-entry inward merger review -
i. General trends -
ii. Typical scenarios involving mergers and acquisitions -
(b) Outward merger review - (c) Worldwide dominant positions -
(d) Post-entry competition issues -
i. Ancillary agreements restraining competition -
ii. Secondary effects -
iii. Cross-border technology alliances
C. Broader policy implications
1. The importance of competition policy -
2. International cooperation -
(a) The need for international cooperation -
(b) Obstacles
i. Impediments to information access -
ii. Limited enforcement cooperation -
iii. Differences in competition laws -
(c) Existing cooperation arrangements -
3. Looking ahead
D. Competition policy and market outcomes
1. Naturally concentrated markets -
2. Competing objectives -
(a) Promoting development -
(b) Other objectives -
Notes
References
"
Apart from development objectives, there are a number of other objectives that may not
be well served by market forces and that therefore may motivate governments to play a more
active role in markets. These include:
• Safeguarding national security. Virtually all governments intervene in markets to
maintain domestic production capacity in certain industries considered essential to
national security by restricting foreign (and sometimes even domestic) participation
in these. They do so to minimize the risk of disruption of supply in the event of
conflict and to keep certain knowledge (especially relating to high technology) from
potential adversaries.
• Protecting labour rights. A fully market-driven national labour market would have
no minimum wages, would not allow unionization or other forms of cooperative
labour agreements, would not necessarily prohibit indentured servitude (a form of
slavery based upon contracts) and would probably not impose regulations relating
to the quality and safety of the work environment upon firms. Most societies have
therefore recognized the need to regulate national labour markets because market
forces would give rise to outcomes that neither governments nor societies find
desirable.
• Safeguarding culture. Governments sometimes regulate cultural industries, with a
view towards protecting and maintaining national and cultural identity.
• Promoting positive externalities. Positive externalities relate to activities whose net
social benefit exceeds the return that a private investor could expect under normal
market conditions. In other words, in cases where market signals understate the
benefits to society of the activity in question and where market signals alone
determine levels of investment and output, these would be less than optimal from
a social perspective. Education and health care are among the most common
instances of activities in which governments intervene in markets based upon the
expected positive externalities associated with these services."
|
From UNCTAD
World Investment
Report 1991:
The Triad in Foreign Direct Investment
"This first volume in the World Investment Report series analyses the Triad
(Japan, the European Community and the United States) in terms of foreign direct
investment.
It looks at the role transnational corporations play in
promoting regional economic integration around the three poles of the
Triad,
describes the linkages between foreign direct investment and
trade, technology and financial flows, and
highlights policy
implications for developing countries and the international community."
|
From The World Bank Group
World Development Report 2009
Reshaping Economic Geography
Spatial Disparities and Development Policy
Economic growth will be unbalanced, but development still can be inclusive—that is the message
of this year’s World Development Report. As economies grow from low to high income,
production becomes more concentrated spatially. Some places—cities, coastal areas, and connected
countries—are favored by producers. As countries develop, the most successful ones also
institute policies that make living standards of people more uniform across space. The way to get
both the immediate benefi ts of the concentration of production and the long-term benefi ts of a
convergence in living standards is economic integration.
Although the problems of economic integration defy simple solutions, the guiding principle
does not have to be complex. The policy mix should be calibrated to match the diffi culty of the
development challenge, determined by the economic geography of places. Today, policy discussions
about geographic disparities in development often start and end with a consideration of
spatially targeted interventions. The Report reframes these debates to include all instruments for
economic integration—institutions, infrastructure, and incentives. The bedrock of integration
efforts should be spatially blind institutions. As the challenges posed by geography become more
diffi cult, the response should include connective infrastructure. In places where integration is
hardest, the policy response should be commensurately comprehensive: institutions that unite,
infrastructure that connects, and interventions that target.
|
O.
Sunkel, 1985
The transnational corporate system
There are some crucial questions relating to the TNC which one
cannot begin to understand, much less to answer, if one does not
have a more realistic picture of contemporary capitalism. The
so-called market has in fact been superseded to a significant degree
by public and private planning. To a very large extent, the visible
hands of the State and the TNC have long replaced the mythical
invisible hand of laissez-faire capitalism, if it ever existed. It
is not really the individual institution of the TNC as such that is
the object of so much attention. There have been individual instances
of large world-wide business organizations in the past which have not
aroused such great concern. The focus is rather on the emergence of a
transnational business system with such a great potential for socially
uncontrolled power and influence that international society finds
itself forced into a profound reorganization in order to accommodate it.
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United Nations - Economic Comission for Latin America and the Caribbean
Twenty-Ninth Session, Brasilia, Brasil
6-10 May 2002
Globalization and Development
The process that has come to be known as globalization, -i.e.,
the progressively greater influence being exerted by worldwide
economic, social and cultural processes over national or regional
ones— is clearly leaving its mark on the world of today. This is not a
new process. Its historical roots run deep. Yet the dramatic changes in
terms of space and time being brought about by the communications
and information revolution represent a qualitative break with the past.
In the light of these changes, the countries of the region have requested
the secretariat to focus the deliberations of the twenty-ninth session of
ECLAC on the issue of globalization and development.
Globalization clearly opens up opportunities for development.
We are all aware -and rightfully so- that national strategies should
be designed to take advantage of the potential and meet the
requirements associated with greater integration into the world
economy.
This process also, however, entails risks:
risk generated by
new sources of instability in trade flows and, especially, finance;
the
risk that countries unprepared for the formidable demands of
competitiveness in today’s world may be excluded from the process;
and the risk of an exacerbation of the structural heterogeneity
existing
among social sectors and regions within countries whose linkages with
the world economy are segmented and marginal in nature.
Many
of these risks are associated with two disturbing aspects of
the globalization process:
The first
is the bias in the current
form of market globalization created by the fact that the mobility of
capital and the mobility of goods and services exist alongside
severe restrictions on the mobility of labour. This is reflected in the asymmetric, incomplete nature
of the international agenda that accompanies the globalization process. This agenda does not, for
example, include labour mobility. Nor does it include mechanisms for ensuring the global coherence
of the central economies’ macroeconomic policies, international standards for the appropriate
taxation of capital, or agreements regarding the mobilization of resources to relieve the
distributional tensions generated by globalization between and within countries...The
second...
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Global Value Chains
concepts and tools
The
value chain describes the full range of activities that firms and workers do to
bring a product from its conception to its end use and beyond. This includes
activities such as design, production, marketing, distribution and support to
the final consumer. The activities that comprise a value chain can be contained
within a single firm or divided among different firms. Value chain activities
can produce goods or services, and can be contained within a single geographical
location or spread over wider areas. The GVC Initiative is particularly
interested in understanding value chains that are divided among multiple firms
and spread across wide swaths of geographic space, hence the term "global value
chain."
Why are we interested in global value
chains? Studies from a range of disciplines show that global value
chains have become much more prevalent and elaborate in the past 10 to 15
years. While many firms have had international operations and trading
relationships for decades and a few for more than a century, global value chains
now contain activities that are tightly integrated and often managed on a
day-to-day basis. This means that firms and workers in widely separated
locations affect one another more than they have in the past. Some of these
effects are quite straightforward, as when a firm from one country establishes a
new factory or engineering center in another country, and some are more complex,
as when a firm in one country contracts with a firm in another country to
coordinate production in plants owned by yet another firm in a third country,
and so on...
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Patterns of international capital flows and
their implications for economic development
E. Prasad, R.G. Rajan and A. Subramanian - 2006
"Economic theory posit that capital should, on net, flow from richer to
poorer countries...whe show that the paradox has,if anything,
intensified over time,with capital, in fact, flowing from poorer to
rich countries..."
General Discussion on this paper
The rise of offshoring: it's not wine for cloth anymore
G. M. Grossman and E. Rossi-Hansberg - 2006
General Discussion on this paper
Shifts in economic geography and their causes
A. J. Venables - 2006
General Discussion in this paper
Impact of globalization on monetary policy
K. S. Rogoff - 2006
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From World Investment Report 2002:
Transnational Corporations and Exports Competitiveness
Chapter V
International Production System
A. Drivers and features
B. Case studies
C. Conclusions
TNC activities affect the export performance of host countries through a range of equity and non-equity relationships.
What is common to all of them is that production -and, more broadly, the operations of a firm- is organized under the
common governance of TNCs...In other words, global markets increasingly involve competition between entire production
systems, orchestrated
by TNCs, rather than between individual factories or firms"
While the growth of international
production systems is well recognized, it
is less well known that there is a growing
tendency for firms, even large TNCs, to
specialize more narrowly and to contract
out more and more functions to independent
firms, spreading them internationally, to take
advantage of differences in costs and logistics.
Some are even opting out of production
altogether, leaving contract manufacturers
to handle it while they focus on innovation
and marketing. The main suppliers and contract
manufacturers are themselves often large
TNCs, with global “footprints” matching those
of their principals and with their own
subcontractors and suppliers. However, TNCs
also increasingly use national suppliers and
contractors in host economies. Specialization
does not stop here: leading TNCs are also
entering into joint innovation arrangements
with other firms – competitors, suppliers
or buyers – and with institutions such as
research laboratories, universities and so
on. Thus, the emerging global production
system is becoming more multifaceted , but
with tighter coordination by lead players
in each international production system.
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From Trade and Development Report 2007:
Regional cooperation for development
The Trade and Development Report 2007,...
recommends that developing countries should
strengthen regional cooperation with other
developing countries, but proceed carefully with
regard to North-South bilateral or regional
preferential trade agreements. Such agreements may
offer gains in terms of market access and higher
foreign direct investment, but they can also limit
national policy space, which can play an important
role in the medium- and long-term growth of
competitive industries
From Trade and Development Report 2006:
Global partnership and national policies for development
"The rules and commitments of the international trading regime restrict the
de jure ability
of developing nations to adopt national development policy".
"Rules and commitments, which in legal terms are equally binding for all countries,
in economic terms might impose more binding constraints on developing countries"(p. 167)
From Trade and Development Report 2005:
New Features of Global Interdependence
"Natural-resource
endowments determine the degree to which selfsufficiency
in food and raw materials is compatible with rapid industrial
development and growth ... but the balance-of-payments constraint limits import growth." (p. 52)
More Trade and Development Reports here
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United Nations Organization - 1 May 1974
"The General Assembly
Adopts the following Declaration:
Declaration on the
Establishment of a New International Economic Order
We, the Members of the United Nations,
Having convened a special session of the General Assembly to
study for the first time the problems of raw materials and development, devoted
to the consideration of the most important economic problems facing the world
community,
Bearing in mind the spirit, purposes and principles of the Charter of
the United Nations to promote the economic advancement and social progress of
all peoples,
Solemnly proclaim our united determination to work urgently for THE
ESTABLISHMENT OF A NEW INTERNATIONAL ECONOMIC ORDER based on equity,
sovereign equality, interdependence, common interest and cooperation among all
States, irrespective of their economic and social systems which shall correct
inequalities and redress existing injustices, make it possible to eliminate the
widening gap between the developed and the developing countries and ensure
steadily accelerating economic and social development and peace and justice for
present and future generations, and, to that end, declare:
1. The greatest and most significant achievement during the last decades has
been the independence from colonial and alien domination of a large number of
peoples and nations which has enabled them to become members of the community of
free peoples. Technological progress has also been made in all spheres of
economic activities in the last three decades, thus providing a solid potential
for improving the well-being of all peoples. However, the remaining vestiges of
alien and colonial domination, foreign occupation, racial discrimination,
apartheid and neo-colonialism in all its forms continue to be among the
greatest obstacles to the full emancipation and progress of the developing
countries and all the peoples involved. The benefits of technological progress
are not shared equitably by all members of the international community. The
developing countries, which constitute 70 per cent of the world's population,
account for only 30 per cent of the worlds income. It has proved impossible to
achieve an even and balanced development of the international community under
the existing international economic order. The gap between the developed and the
developing countries continues to widen in a system which was established at a
time when most of the developing countries did not even exist as independent
States and which perpetuates inequality...
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London - 4 April 2006
World's biggest 25 food companies not taking health seriously enough
The world’s top 25 food companies appear not to be taking the new global diet
and health agenda seriously enough, says an 80 page report from The City
University out today.
Researchers at City’s Centre for Food Policy studied the annual reports,
accounts and HQ websites (to Autumn 2005) of the top 10 food manufacturers, top
10 food retailers and top 5 foodservice companies (top 3 fast food and top 2
contract caterers).They were rated for whether the companies were doing anything
about the health agenda agreed by the world’s governments at the World Health
Organisation.
In May 2004, a Global Strategy on Diet, Physical Activity and Health was
passed by the World Health Assembly (the WHO’s governing body). This made
recommendations to companies as to what they could do to health tackle the
world’s diet crisis – not just obesity but heart disease, cancers and
diabetes.
------------------------- |
| IMF: International Capital
Flows, 2001 |
| Foreign Policy IN FOCUS
|
| CorpWatch: Holding Corporations Accountable |
| CorpWatch:
Alliance for a
Corporate-Free UN |
The
General Agreement on Trade and Commerce
GATSwatch:
- debate
- corporate lobbying
- development
- education
- e-commerce
- energy
- environment
- financial services
- gender issues
- health
- labour rights
- labour mobility
- libraries
- local government
- postal services
- public services
- privatisation
- retail / wholesale
- tourism
- transport
- water
|
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Maio/2011