Transnational Corporations and Third World Industrialisation

Abstract

This article addresses the question of how Transnational Corporations (TNCs) affect the process of industrialisation in the Third World. An empirical analysis of corporate concentration, manufacturing investments, factors facilitating global industrial restruc turing, and the emergence of Export Processing Zones in Third World countries is offered. The evidence suggests that the short term effects of TNC investments on foreign exchange earnings are positive, but the long term effects rather negative. The employment effects of TNCs are found to be marginal, while jobs are typically unskilled and monotonous. Linkages within corporations' own international production networks are usually preferred to links with host economies. The bargaining position of TNCs vis-à-vis Third World governments is favourable: companies are mobile and there is an abundance of alternative production sites.