NEW ISSUE OF TRANSNATIONAL CORPORATIONS JOURNAL PUBLISHED

 

(Reissued as received.)

GENEVA, 14 January (UNCTAD) -- The latest issue of Transnational Corporations, a refereed journal published by the United Nations Conference on Trade and Development (UNCTAD) three times a year, provides new insights into the operations of transnational corporations (TNCs), including those from developing countries, and their contribution to economic development.  Contrary to widely held perceptions, only a small number of TNCs have achieved truly global corporate success.  Although much smaller in size and number, TNCs from developing countries are also increasing their presence in the global economy.  This issue (vol. 13, no. 3: December 2004) contains a study on the emerging phenomenon of developing-country TNCs that set up manufacturing operations in high-wage industrialized economies.  It also contributes to the ongoing debate on the link between foreign direct investment (FDI) and economic growth through an analysis of more disaggregated data than those used in previous studies.

Alan M. Rugman and Alain Verbeke address the geographical distribution of sales of some of the world’s largest TNCs, with a focus on the three legs of the “Triad” (North America, European Union, Asia).  According to the authors, a firm can be considered to have achieved global corporate success only if it is able to earn a balanced regional distribution of sales. Only high sales across the globe, especially in the wealthy and technologically advanced regions, demonstrate both strong firm-level capabilities on the supply side to market products and services worldwide, and great willingness of sophisticated consumers on the demand side, to pay for that firm’s output.  For the analysis of the supply side, the article’s conceptual framework distinguishes among the global, regional and national loci of decision-making and levels of product standardization.

The article identifies the 20 TNCs with the highest foreign-to-total sales ratios from UNCTAD’s list of the world’s largest TNCs that are also Fortune Global 500 firms.  It measures the distribution of sales across the Triad regions for these firms, only three of which actually have a substantial part of their sales distributed across the three legs of the Triad.  The others are biregional, host region-oriented or home-Triad region-oriented.  This empirical finding is further elaborated by investigating whether a regional component can be identified in the specific cases of transnational strategy, building on the framework presented in the article.

In another article, Kevin I.N. Ibeh, Stephen Young and Hui Chu Lin examine the modal choices, key activities and motivations of non-dominant information technology and electronics firms from Taiwan Province of China operating in the United Kingdom, against the backdrop of recent trends in the global economy.  Its main findings include the limited prospects of the sample firms’ evolution into manufacturing activity in the United Kingdom and the increasing importance of inter-firm logistical collaboration.  Among the key policy implications discussed are the need for appropriate measures to support the United Kingdom’s positioning as a gateway to, and preferred base for, intelligence-gathering on other European markets; the need for “high-wage” advanced economies to capitalize on their not easily replicable location-specific advantages (such as reputable R&D clusters and a substantial domestic market) in targeting FDI in the R&D, design and sales-related areas; and the importance of a more balanced investment attraction strategy that actively targets major global players (and their capacity to attract secondary inward investment) without compromising support for indigenous growth companies.  Future research should pay greater attention to the intraregional, rather than intra-country, context of firms’ evolution in international markets, the authors say.

An article by Peter Nunnenkamp and Julius Spatz notes that it is surprisingly hard to find conclusive evidence supporting the widely held view that developing countries should draw on FDI to spur economic development.  The authors contend that virtually all empirical studies on the subject have found the impact of FDI on growth to be ambiguous because of the highly aggregated data they have used.  These aggregations have blurred the distinctions among resource-seeking, market-seeking and efficiency-seeking FDI and have ignored the compatibility of the different types of FDI with economic conditions prevailing in individual host economies.  Analysing FDI stock that originates in the United States and is to be found in major sectors and specific manufacturing industries in a large number of developing economies, the article concludes that positive growth effects of FDI are not automatic.  Host economy and industry characteristics, and the interaction among them, strongly influence the growth impact of FDI in developing economies.

Contacts:  UNCTAD Press Office, tel.:  +41 22 917 5828, e-mail:  unctadpress@unctad.org; K. Sauvant, tel.:  +41 22 917 5707, e-mail:  karl.sauvant@unctad.org; M. Lim, tel.:  +41 22 917 5520, e-mail:  michael.lim@unctad.org; or tncj@unctad.org.

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