Stephen Hymer

The Multinational Corporation and the Law of Uneven Development

We have been asked to look into the future toward the year 2000. This essay attempts to do so in terms of two laws of economic development: the Law of Increasing Firm Size and the Law of Uneven Development.1

The Internationalization of Capital

The multinational corporation, or the multinational corporate system, has three related sides: international capital movements; international capitalist production; and international government. By international capital movements I refer first to the direct investment of corporations in their overseas branches and subsidiaries, which. at present amounts to about

THE MULTINATIONAL CORPORATION AND THE LAW OF UNEVEN DEVELOPMENT

80 billion for American multinationals and about

The international operations of national firms : a study of direct foreign investment

50 billion for non-American multinationals. Second, I refer to the associated flows of short-term, long-term, and equity capital stimulated by the multinational corporation, which in turn stimulate the growth of international finance, that is, deposits in foreign banks, investments in the Eurocurrency and Eurobond market, investments in corporate stock of multinational firms by non-nationals, and so forth. The direct foreign investment by corporations has served as a base for a vast superstructure of credit drawing capital from all over the world; the associated noncorporate private capital flows from one country to another are at least as large as direct investments by corporations, and probably are growing faster. International capitalist production refers to the incorporation of labor from many countries into an integrated worldwide corporate productive structure. American firms, for example, directly employ from 5 to 7 million people in foreign countries, and a growing but unknown number indirectly through subcontracting, licensing, and so forth. By comparison, the total employment of the 500 largest American firms is 13 or 14 million (this figure includes some, but not all, foreign employees),

international operations of national firms

Publisher Summary This chapter focuses on the multinational corporation and the law of uneven development. The evolution of business enterprise from the small workshop to the Marshallian family firm represented only the first step in the development of business organization. Multinational corporations are torn in two directions. On the one hand, they must adapt to local circumstances in each country. This calls for decentralized decision making. On the other hand, they must coordinate their activities in various parts of the world and stimulate the flow of ideas from one part of their empire to another. This calls for centralized control. They must, therefore, develop an organizational structure to balance the need for coordination with the need for adaptation to a patch-work quilt of languages, laws, and customs. The governments ability to tax multinational corporations is limited by the ability of these corporations to manipulate transfer prices and to move their productive facilities to another country.