John Diebold. Why be scared of them?
Let me begin with three assumptions: During the next two decades there will be a large transfer of manufacturing industry from the three rich industrial areas of the world ( North America, northwest Europe, Japan) to the poorer areas to the south. This transfer will include manufactures of both finished goods and components for export back to the richer countries. Between now and 1993, the rich third of the world will increasingly find both economic and social reasons to move into the post-manufacturing age; to shift manufacturing to the less-developed countries (LDC's).
The multinational corporation (MNC) will be the mechanism initially most favored for this southward transfer of manufacturing. Often this will mean a wholly-owned American (or European or Japanese) subsidiary. There are some advantages as well as disadvantages for LDC's in this. The best strategy for a developing country should be to put itself into a position where it can choose. My guess for the next two decades is that if a developing country has a thriving domestic business sector, then it is likely that the multinational corporations will seek it out. It will then be up to the developing country to choose the terms to allow them. The development policy that will not succeed will be one that stops the growth of a domestic business ethos, and that then erects barriers against the participation of foreign firms that, as a result of these factors, will not want to come in anyway.
In some cases host governments will inhibit economic development, either by mistake or because they do not want it. In many developing countries, the class struggle today is really between the "new men of government" and the "new men of business" (both domestic and foreign). These "new men of government" may win the struggle in some countries, either because they have the military on their side, or because the masses can be won to support them by a mixture of economic apathy and emotional romanticism (fostered by nationalism, anti-colonialism, anti-Americanism, anti-capitalism, etc.). But while this scenario is convincing as a sketch of what will happen in many of today's poorer countries some of the time, it is not convincing as a sketch of what will happen in all of them all of the time. At least some of today's poorer countries are likely to climb eagerly onto the development bandwagon, and there will then be an Incentive to follow them. Those leading the climb will be the "new men of business" in the developing countries. Sometimes (as in Mexico and Japan) the policy they carry through will be one that restricts the import of technology through the particular medium of MNC's; sometimes (as in Brazil and Singapore) they will be sell-confidently liberal in importing technology through the MNC's. My belief is that both policies will sometimes work.
Business generated by multinational enterprises outside their home countries already amounts to about $350 billion worth of goods and services a year (three-fifths of it by U.S. companies). This is one-eighth of the gross product of the non-Communist world. The proportion is increasing rapidly, because the production of MNC's seems to be expanding at about 10 percent a year. On a crude extrapolation of recent trends, one could expect MNC's to be responsible for one-fourth of the production of the nonCommunist world by the early 1980's.
If the host countries continue to receive multinationals, there is a strong probability that this last figure will prove to be an underestimate. Trends suggest that the growth of multinational business activity is likely to be even faster in the near future than in the immediate past, partly because (a) American companies have mastered the techniques of multinationalism; but largely because (b) Western Europe and Japan are very likely in the period 1973-93 to follow America's 1950-70 trend, and start "ex-