Academic journal article CEU Political Science Journal

William J. Hausman, Peter Hertner and Mira Wilkins, Global Electrification. Multinational Enterprise and International Finance in the History of Light and Power 1878-2007

Academic journal article CEU Political Science Journal

William J. Hausman, Peter Hertner and Mira Wilkins, Global Electrification. Multinational Enterprise and International Finance in the History of Light and Power 1878-2007

Article excerpt

William J. Hausman, Peter Hertner and Mira Wilkins, Global Electrification. Multinational Enterprise and International Finance in the History of Light and Power 1878-2007 (New York: Cambridge University Press, 2008).

Global Electrification pulls together a cohort of leading experts in the fields of industrial and financial history of power and light enterprises to offer a global history of electric utility companies since the early steps in the last quarter of the nineteenth century through the late twentieth century from the vantage point of international business history and transnational financial history. The authors do investigate the early beginnings and evolution of the electric utility industry in the background of both the rise to globalism of multinational corporations and the worldwide spread of international investments to crisscross private-sector activities and government-run initiatives, national and transnational concerns and capital flows. They adopt a two-fold research perspective: foreign portfolio investments and foreign direct investments are brought into focus alongside to pinpoint the changing balance between the level of internationalization and the degree of domestication--to borrow from the book's vocabulary--featuring the history of the electricity industry since the early technological innovations (chapter 1), down into the recent attempts over the last twenty years to revive the role of multinational corporations after half a century trend toward either private-sector or state-owned national control (chapter 7).

According to the authors, this domestication pattern spanned since WWII through the 1970s recession years, following a crucial five-decade period when the light and power industry grew out of rising international flows in capital and industrial investments. The basic argument underlying this broad interpretation of the early decades is that the electric utility industry did require a high level of capital intensive investments to turn the early technological discoveries into the electricity generating service sector. In part 1, after reviewing the early technical discoveries (pp. 6 ff.), Hausman, Hertner and Wilkins link this capital intensity driven internationalization to the birth and ascendancy of the modern city. They insist on the role of urbanization and modern system of communications in driving up consumers' demand for electricity. Both foreign direct investments leading to the setting up of foreign owned enterprises, and the world wide diffusion of foreign portfolio investments carried out by financial intermediaries and private-sector multinationals, did support key capital-intensive investments, mostly, but far from only, in the West European industrializing countries. At the turn of the Twentieth century the British economy had already taken a lead in serving either as a creditor or as a direct investor in foreign countries, followed by the American, Swiss, Dutch and German multinationals. By 1914 the West European, Russian and Mexican electricity companies were extensively foreign owned or controlled (chapter 3).

During the 1920s, this internationalization pattern began to fall apart with significant advance of government-run activities in Russia, and the rising role of the Swiss and German holding companies. Notwithstanding this trend, through the 1929 crisis foreign direct investments and

portfolio investments continued to play a role. Global electrification figures out the 1930s world economic crisis as the key watershed toward the following domestication pattern. Between 1929 and 1931 the European (Swiss and German) holding companies did much business out of the down fall of the American stock markets and purchased stocks and bonds on the cheap, whereas transatlantic German-American partnership were established. Shortly after 1931 a record-setting series of nationalizations and private sector acquisitions in the new authoritarian European regimes and through the Tennessee Valley Authority in the US (chapter 5) drove up this turn toward domestication. …

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