Kulubekova Galiya Aidarovna (Кулубекова Галия Айдаровна)

L. N. Gumilyov Eurasian national university, Republic of Kazakhstan (Евразийский национальный университет им. Л. Н. Гумилёва, Республика Казахстан)

Fourth period of transnational corporations' development: scientific and technological progress, increasing competition in the global market

Some researches include the period from 1970 till 1990 into the third phase of transnational corporations (hereinafter – TNC) growth. For example, P. Muchlinski. He calls the period between 1970 and 1990 “the period of renewed international competition” [1, p. 18]. However, others consider the period from 1970 till the end of XX century as another separate period in the development of the TNC due to the fact that it has certain specific features such as strengthening global economic ties and the increasing competition on the market, accelerated process of mergers and acquisitions [2, p. 46].

This period is remarkable due the European integration, which changed the global economic pattern. The European Communities (the European Coal and Steel Community, the European Economic Community, and the European Atomic Energy Community) brought European countries to close economic integration, which helped to cope with the consequences of war. The following period of the 1960s is called as “a period of economic growth” for the European countries while the 1970s are called “a growing Community” [3]. The outward foreign direct investment of the European countries during these periods grew significantly. For example, the foreign direct investment outflows of the United Kingdom increased from 700 millions of US dollars in 1960 to 1 166 millions of US dollars in 1970; the foreign direct investment outflows of the Federal Republic of Germany increased from 116 millions of US dollars in 1960 to 686 millions of US dollars in 1970. The United Kingdom kept the position of the main investor among European countries. However, it did not show any significant rise as investment recipient, while some other European countries strengthened their positions as host countries. For example, foreign direct investment inflows into Italy' economy grew from 197 millions of US dollars in 1960 to 606 millions of US dollars in 1970 [4]. During this period, the western Europe became alongside with the USA the main investor and also the new host region for investment.

The USA kept strengthening its position as well. The foreign direct investment outflows from this country grew from 1 674 millions of US dollars to 4 765 millions of US dollars in a decade, from 1960 to 1970. By 1971, the USA was the major source of foreign direct investment outflows. In 1978, the USA was also the major host country foreign direct investment. By 1971, the USA was the world leader in terms of the amount of the largest industrial corporations (358 corporations). Second place was taken by Japan (74 corporations), the United Kingdom was on the third place with 61 corporations. The following 8 positions in the ranking were occupied by European countries. The Western Europe was the origin for 163 corporations in total [5]. These economies (the USA, Japan, and Europe) are still major home countries for TNC in the world.

This period is also known for the rapid development of the Asia-Pacific region. The inflow of foreign direct investment into Southeast Asia and Oceania quintupled from 531 millions of US dollars in 1970-72 to 2,4 billions of US dollars in 1978-80. The Asia-Pacific region became the new “growth-pole” of the global economy [6, p. 578].

At the end of this period, several states with a closed planned economy started moving in the way of cross-border business cooperation. The dissolution of the USSR led to the formation of new 15 independent countries, which had started receiving their first foreign investment inflows in 1992 – 1993 and later became a prominent host region for many TNC [7, p. 303-309].

In general, the decade from 1970 to 1980 was marked by the fast growth of cross-border investment flows. The foreign direct investment inflows grew from 10 billions of US dollars in 1970 to 50 billions of US dollars in 1984 [5, p. 75].

This period was also marked by the accelerating process of mergers and acquisitions, which gave a birth to the most powerful TNC. A good example is the Bank of Tokyo-Mitsubishi UFJ. In 1996, the Mitsubishi Bank and the Bank of Tokyo merged to form the Bank of Tokyo-Mitsubishi. The combination of the Mitsubishi Bank’s extensive network of domestic branches and the Bank of Tokyo’s overseas strength created Japan’s largest bank. In the beginning of the next century in 2002, the Sanwa Bank and the Tokai Bank along with the Toyo Trust & Banking Co. merged into the United Financial of Japan. Later in 2006, the Bank of Tokyo-Mitsubishi and the United Financial of Japan merged to form the Bank of Tokyo-Mitsubishi UFJ. Today, the Bank of Tokyo-Mitsubishi UFJ is Japan’s largest bank and one of the world’s largest banks, with offices in 40 countries besides Japan [8].

The fourth period of TNC' development was formed under conditions of continuing scientific and technological progress. At the same time, it was shaped by the strengthening global economic ties and increasing competition in the global market, which caused the acceleration of the mergers and acquisitions process. As a result, some of the TNC enlarged significantly and concentrated the enormous amount of capital and production. These specific characteristics prove that the period from 1970 till the late XX century should be considered as a separate phase of TNC' development.

BIBLIOGRAPHY

1. Muchlinski, Peter. Multinational Enterprises and the Law. Oxford: Oxford UP, 2007. p. 18.

2. Polyakov V. and Schenin R. Мировая экономика и международный бизнес [World economy and international business]. 5th ed. Moscow. 2008. p. 46

3. The website of the European Union at http://europa.eu/about-eu/eu-history/index_en.htm [accessed January 18, 2015]

4. UNCTC (1973). Multinational corporations in world development. New York

5. UNCTC (1988). Transnational Corporations in World Development: Trends and Prospects. New York

6. Kowalewski, D. (1987). Transnational Corporations and Asian Inequality. Pacific Affairs, 60(4). p. 578. http://doi.org/10.2307/2759184

7. UNCTAD (1997). World Investment Report. Transnational Corporations, market structure and competition policy. New York and Geneva. pp. 303-309. Available at http://unctad.org/en/docs/wir1997_en.pdf [accessed February 20, 2015]

8. The website of Mitsubishi UFJ Financial Group at http://www.bk.mufg.jp/global/aboutus/origins/index.html [accessed February 09, 2015]