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Multinational Business and National Economic Goals

Published online by Cambridge University Press:  22 May 2009

Raymond Vernon
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Extract

This essay elaborates several basic propositions. First, the extraordinary changes in international communication and international transportation during the past 40 or 50 years have profoundly altered the horizons of business decisionmakers, giving enormous stimulus to the creation of multinational business enterprises. Second, in narrow economic terms the multinationalization of business activity has added to the efficiency of the world economy. Third, the advances in transportation and communication, reinforced by the existence of multinational business enterprises, have stimulated interaction between national economies and reduced the effectiveness of national controls, particularly in advanced countries. Finally, despite the increasing porosity of national boundaries these countries have been expanding and refining their national economic and social goals in ways that require more controls at national borders or more joint controls between cooperating states.

Type
Articles
Information
International Organization , Volume 25 , Issue 3 , Summer 1971 , pp. 693 - 705
Copyright
Copyright © The IO Foundation 1971

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References

1 This essay is a revised version of my testimony before the Subcommittee on Foreign Economic Policy of the Joint Economic Committee, A Foreign Economic Policy jor the 1970's, Hearings, 91st Cong., 1st sess., 12 4, 1969, pp. 139–152Google Scholar. The issues presented here are developed at greater length in my recent book, Sovereignty at Bay: The Multinational Spread of U.S. Enterprise (Harvard Multinational Enterprise Series) (New York: Basic Books, Publishers, 1971)Google Scholar.

2 This point is elaborated in my essay, “Organization as a Scale Factor in the Growth of Firms,” in Industrial Organization and Economic Development: In Honor of E. S. Mason, ed. Markham, Jesse W. and Papanek, Gustav F. (Boston: Houghton Mifflin Co., 1970), pp. 47–66Google Scholar.

3 See, especially, Vernon, chapters 3 and 5.

4 First Hickenlooper, amendment to the Foreign Assistance Act of 1961, United States Code, Vol. 22, section 2370(e)Google Scholar.

5 For a more general proposal of this nature see Goldberg, Paul M. and Kindleberger, Charles P., “Toward a GATT for Investment: A Proposal for Supervision of the International Corporation,” Law and Policy in International Business, Summer 1970 (Vol. 2, No. 2), pp. 295–325Google Scholar.

6 A striking exception to this general trend was the United States government decision in August 1971 to break the tie between the United States dollar and gold. That step could conceivably set back the trend described in the text for some time.