Geography Reference
In-Depth Information
of modern TNCs was the use of technologies to generate new forms of time-
space compression, particularly cheap and reliable air travel, which allowed
large
firms to move managers around quickly, encouraging the centralization
of corporate decision making so that bureaucratic costs can be spread out
over large number of production facilities and greatly improving the e
fi
ciency
of managerial labor (Hugill 1993). By the 1970s, i.e., at the height and near
the end of the post-war boom, roughly 30,000 TNCs controlled two-thirds of
world trade and employed 100 million people (Dicken 2007). Some of the
largest TNCs had annual revenues larger than the GNP of certain countries.
Given the unsurpassed size and importance of the U.S. during this period,
American TNCs were disproportionately represented among the world's
largest
rms.
TNCs simultaneously rely upon nation-states and undermine their central-
ity to global political space. Commonly, they locate their headquarters in
their country of origin, generally in a large metropolitan area in which high
wage, white-collar administrative, managerial, and research functions have
access to the agglomeration economies such regions o
fi
er. In contrast, TNCs
often relocate less skilled, low-wage, blue collar assembly functions in lower-
income countries via branch plants. However, despite the stereotype that
TNCs are all global behemoths with operations in every continent, the reality
is that most such institutions invest in only two or three countries (Dicken
2007). Firms with plants throughout the world are the exception, not the
norm. Moreover, contrary to the stereotype that TNCs always seek out low-
wage pools of Third World labor, most TNCs, which originate in capital-rich,
developed countries, invest in other capital-rich, developed countries.
The costs and bene
ff
ts of TNC presence, especially in developing countries,
have been hotly debated. Advocates of neoclassical economics stress the
bene
fi
ts of TNCs, including the generation of jobs, improved exports, foreign
revenues terms of trade, technology transfer, rising skills, and higher product-
ivity. Critics generally hold that such capital-intensive
fi
firms generate rela-
tively few jobs; that skilled managerial, technical, and executive positions are
often
fi
filled by residents of the home country; that TNCs may drive local
producers into bankruptcy, i.e., job displacement is greater than job creation;
that the pro
fi
ts of foreign operations are often repatriated to the TNCs' home
countries; that non-local subcontracts yield very low local employment or
output multipliers, minimizing the potential for long-term development; that
government subsidies and concessions to TNCs inhibit the state's ability to
provide public services; and that TNCs have a long history of political inter-
ference, including bribery, corruption, and invoking foreign powers, particu-
larly the U.S., in
coups d'état
against unfriendly regimes. Such criticisms
amount to an argument that TNCs perpetuate a state of neocolonialism. The
impacts of TNCs are contingent, temporally and geographically speci
fi
fi
c mix-
tures of both costs and bene
ect the relative bargaining power of
both the TNC and the host country involved. Acknowledging this complexity
means situating them conceptually between the extremes of stereotypes that
fi
ts that re
fl
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