Home > Uncategorized > The transnational corporation and economics

The transnational corporation and economics

from Grazia Ietto-Gillies and WEA Commentaries 

There is now a very large body of literature on theories of the transnational corporation (TNC) and the subject has reached a suitably mature stage to have a history of economic thought about it.2 The first theory of the ‘International Firm and its Operations’ was developed in 1960 by Steven Hymer, a Canadian student working for a doctorate under the supervision of Charles Kindleberger at the Massachusetts Institute of Technology. A British scholar at the University of Reading was, contemporaneously. researching the effects of American investment in the UK. John Dunning later developed his own very successful theory (1977 and 1979) and continue to do theoretical and applied research in the field till his death a few years ago. Many theories and studies have been developed on both sides of the Atlantic in the intervening decades, in particular the so-called ‘Internalization theory’ by Peter Buckley and Mark Casson (1976) also at the Reading University. The theory has recently been updated by Casson (2018).

The subject of ‘International Business’ is now well developed and most theories of the TNC are developed and taught in its multi disciplinary context. However, the study of TNCs has not been fully accepted within the academic economics profession – including the non-orthodox academics – and is . . .  read more

  1. Ken Zimmerman
    March 2, 2020 at 1:36 pm

    This examination and conclusions are worthless where cultural differences are not considered. European settlers on the plains of the US considered stealing horses a crime. Many of the indigenous peoples living on these plains considered stealing horses a means to prove one’s worth (the men) as a person, to gain recognition and wealth within their tribes, and improving their own and their family’s status within their tribes. In other words stealing horses was a way to better themselves, socially. What economists refer to with their term “social mobility.” In the end no compromise could be reached between European settlers and indigenous peoples so that forced removal and re-education of indigenous children was implemented in the US and Canada with the goal of “Europeanizing” the children. This did not turn out well. We’re still dealing with it many deep and harmful consequences today.

    Under current cultural circumstances a single country/nation-state for the world is impossible.
    The objectives of private TNCs may be profit or profit-related, leading them to design themselves to seek these goals, but in many parts of the world today, even within the US, these goals are not only unacceptable but considered violations of the basic rights of humans, animals, nonhuman objects and a direct threat to the future of our species and all species.
    No theory of international production, trade, or banking could exist without cultural agreements that are outside the interest and expertise of economists and most TNC executives. It it possible that someday a single culture could encompass the entire world. Today such a world is highly unlikely. Particularly, in a world filling with nationalist populism. Another issue TNCs and economists little understand and are ill equipped to address. Economists and economics fellow-travelers must before all else learn humility in the breath and applicability of their theories and recommendations. And then they must learn to ask for help. Unless, of course their plans are turning once again to 19th century solutions to Europeanize or even Americanize the world. Something the US tried after WWII with mixed results and many negative feedbacks. Some of which are only now beginning to surface.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.