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03035107 B.A. Studies Exchange student Current issues economics What’s the role of multinationals in current economic system? Friday 12th December 2003 As President Nixon proclaims in the 1973 International Economic Report: « By any quantitative measure the post-World War II era has been the most successful in international economic history". There was a lot of evolution since this era but the fact is that international trade increases as the power of multinationals companies. Indeed, Globalisation is pushed by multinational companies. In a basically point of view, their vision of the world is based on an ideal of interdependent, borderless world with open markets and no trade barriers. At first, it is important to give a definition of multinational in order to understand the role of multinational in our current economic system. A MNE (multinational) is usually defined as a firm that controls operations or income-generating assets in more than one country. Attempts have sometimes been made to define MNEs in a more restrictive fashion. It has been suggested that “multinationality” requires operations in a minimum number of countries, usually five or six, or that a firm which is active across borders should be a certain size before it can be called an MNE. In practice, attempts to restrict the definition of MNE encounter such difficulties that most researchers prefer the broad definition offered above. Moreover, the essence of the multinational concept is that the firm controls income-generating assets in at least two countries. The structures, strategies and impact of multinationals have changed considerably over time, and will continue to change in the future. It is this dynamic element of international business which is one of its most important characteristics. That’s why it can be interesting to understand what is the role of multinationals in current economic system. On the one hand, I will study the good aspects and effects of multinationals in our society. And on the other hand, I will make a criticism of multinationals because there is more and more enemy of multinationals through globalisation. First of all, we have to make a small historical review of the apparition of multinationals in the Triad Markets. The first true multinationals were founded in Europe in the 19th century. From an early date they combined overseas raw materials and markets with European management and capital. Shell, Lever and Nestle are outstanding examples, still very successful and widely admired today. The Economist rates Nestle as the world’s most multinational company with 87% of its assets, 98% of its sales and 97% of its workers outside of its homeland. Coca Cola and Mc Donalds, perhaps the best-known global brands, are 31st and 42nd, due to the size of the U.S. Home market, relative to foreign sales. The North American based multinationals, which predominate in many industries today, became more truly multinational in the post World War II period. Prior to that time, foreign trade was a sideline, and management and capital were almost exclusively American. The post-war availability of overseas capital from extensive international banking and securities trading facilitated this change. Also, the growth of operations in many countries and the specialized needs of overseas manufacturing and marketing brought many nationalities into higher management, both abroad and in the U.S.
Approximate Word count = 2076
Approximate Pages = 8.3
(250 words per page double spaced)
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