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Multinational corporations: Trade and investment across the East‐West divide
Author(s) -
Paliwoda Stanley J.
Publication year - 1981
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090020405
Subject(s) - multinational corporation , recession , international trade , business , protectionism , foreign direct investment , investment (military) , capital (architecture) , economics , trade barrier , trade and development , international economics , finance , developing country , economic growth , history , archaeology , politics , keynesian economics , political science , law , macroeconomics
East‐West trade and investment remains a preserve of the multinational corporations due to their resources in finance, manpower and production which enables them to absorb the attendant costs of lengthy negotiations; to meet the occasional high‐volume order placed by a state foreign trade enterprise purchasing on behalf of an entire sector of industry; to aid the state foreign trade enterprise by sourcing from a world‐wide network so as to alleviate currency or distribution problems; and to help with the provision of finance or to agree to part payment by means of the resultant product produced under licence. Size is an important factor, and many of the joint ventures concluded over the last ten years have been for massive investment projects. These joint ventures are of a contractual type and referred to as industrial cooperation agreements' which involve repurchase of the goods produced under licence, often to a value which repays over a specified time the capital borrowed plus interest charges. These counter‐trade agreements have become more popular in the Eastern bloc because of their ‘self‐financing’ principle but are beginning to face mounting criticism in the West, currently facing a trade recession and the echoing pleas for trade protectionism to curb the threat of cheap Eastern imports upon Western job security. Industrial cooperation has been diverted towards the more export intensive branches of the socialist economies and has led to the increasing size and importance of certain of their production enterprises. This has created Western fears of the advent of the ‘socialist multinationals’ or Socialist Common Enterprises. However, industrial cooperation is a recent phenomenon, and if only by default, a strategy will emerge in future years as to the pattern and behaviour of East‐West multinational arrangements.