Integrated transnational corporations traversing real-time electronic networks that span the global economy have produced what one writer terms a "borderless world" (Ohmae, 1991). These technologically enhanced corporations also operate in the non-nationally controlled interstices of the planet (i.e., oceans, seabeds, airwaves, sky, and space), sometimes leaving toxic, life-threatening indicators of their presence. Existing in a sort of parallel world, they are responsible only to amorphous groups of shareholders. Gill and Law (1988: 364-365) state that there is a "growing lack of congruence between the 'world economy,' with its tendencies to promote ever-greater levels of economic integration, and an 'international political system' comprised of many rival states."
A transnational corporation (TNC) is "any enterprise that undertakes foreign direct investment, owns or controls income-gathering assets in more than one [TABULAR DATA FOR TABLE 1 OMITTED] country, produces goods or services outside its country of origin, or engages in international production" (Biersteker, 1978:xii). Although TNCs were in existence prior to the 20th century (the far-flung enterprises of the European colonial powers were the precursors of the modem TNC; see also Wilkins, 1970), it is only since the 1960s that they have become a major force on the world stage (World Bank, 1987:45). Table 1 corroborates this fact by listing the foreign direct investment (FDI) stock of corporations from the beginning of the century to the present. In 1900, only European corporations were major transnational players, but by 1930 American TNCs had begun to make their presence felt. The year 1960 is pivotal because it marks the beginning of a new era in corporate transnationalization. For each of the decades from 1960 to the present, world FDI stock more than tripled, whereas it only doubled during the entire first half of the 20th century.
The phenomenal increase in transnational corporate activity during the latter part of the 20th century may be accounted for in large part by technological innovations in transportation, communication, and information processing which have permitted corporations to establish profitable worldwide operations and still maintain effective and timely organizational control (Hedley, 1995). The actual difference in foreign direct investment up to and after 1960 is even greater than the figures in Table 1 indicate. FDI for 1960 and before includes foreign portfolio investment (i.e., "investments in bonds or stocks that... [do] not carry the power to influence decisions" [Wilkins, 1974:x]), which is mainly undertaken by individuals, as well as foreign direct investment (i.e., "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor" [UNCTC, 1992:39]), which "almost always takes place through transnational corporations" (UNCTC, 1992:v). These two types of investment were not reported separately for most countries prior to 1970. Thus, total FDI stocks are inflated. For example, Wilkins (1974:53-54) reports that in 1929-1930 U.S. foreign portfolio and direct investments were almost equal. American direct investment abroad was only $7.5 billion; the remaining $7.2 billion recorded in Table 1 was foreign portfolio investment.
The magnitude of foreign direct investment flow in the world is revealed by the fact that worldwide sales of foreign affiliates in 1997 were $US 9.5 trillion, compared to world exports of goods and services valued at $US 6.4 trillion (UNCTAD, 1998:5). Global sales of affiliates are considerably more important than exports in delivering goods and services to markets worldwide, which underlines the importance of TNCs in structuring international economic relations. The popularity and viability of this corporate form is demonstrated by the fact that in 1997, 53,607 TNCs controlled nearly 450,000 foreign affiliates located throughout the world (UNCTAD, 1998:4). …