The Attitudes and Rôle of Transnational Enterprises in Economic Integration Processes Among the LDCs

See D. Swann and C.L.- McLochlan , Concentration or Competition: A European Dilemma? (London: Chatham House, 1967), pp. 38-59; and C.P. Kindleberger , " European Integration and the International Corporation," Europe and the Dollar (Cambridge, Mass.: M.I.T. Press, 1966), p. 27.

See E. Tironi , " Economic Integration and Foreign Direct Investment Policies: The Andean Case." Ph.D. Dissertation, MIT, Cambridge, Mass., 1976, p. 223, italics added.

For concrete examples and analysis, see C.V. Vaitsos , The Rôle of Transnational Enterprises in Latin American Economic Integration Efforts (forthcoming).

See C.V. Vaitsos , " Power. Knowledge and Development Policy: Relations between transnational enterprises and developing countries," in G. K. Helleiner , A World Divided: The Less Developed Countries in the International Economy (London: Cambridge University Press, 1976).

Ricardo Ffrench-Davis (1975), " La Armonizacion de Politicas Economicas en Paises en Desarrollo: El caso andino," paper presented at the CINDAILPES seminar on Problems and Perspectives of Integration and National Development of the Andean Countries, La Paz, Bolivia, April.

For the case of Central America, see A. Fuentes-Mohr , La Creacion de un Mercado Commun: Apuntes historicos sobre la experiencia de Centroamerica , BID/INTAL, Buenos Aires, 1973.

For a quite detailed analysis of the petrochemical and automotive sectors within integration schemes and the role of the TNEs, see J.N. Behrman , The Rôle of Internarional Companies in Latin American Integration ( Lexington, Mass.: Lexington Books, 1972), pp. 80 et seq.

See Junac , " Propuesta de la Junta sobre le Programa Sectorial de Desarrollo de la Industria Electronica y de Telecomuniciones," JUN/Propuesta 69. Lima, December 27, 1975.

See JUNAC (unpublished internal document).

For a member of the East African Community, see Steven Langdon , " Multinational Corporations, Taste Transfer and Underdevelopment: A Case Study from Kenya ." Review of African Political Economy, November 2, 1975.

See Jaime Campos , La Participacion Empressarial en el Proceso de Integracion: Las Reuniones Sectoriales de la ALALC,. 1974 , pp. 147-186; C. Ianni , " La Crise de la ALALC y las Corporaciones Transnacionales," Comercio Exterior, Mexico, 1978, pp. 1119-1126; and N.W. Ruocco , "La Problematica de la Negociaciones Comercial en la ALALC," Revista de la Integracion, Buenos Aires, 1972.

See J. Campos , op. cit p. 166,

See J.C. Casas , " Les multinacionales y el comercio latino-americano," Publicaciones, Centro de Estudios Monetarios Latino-americano, Mexico, 1973.

See J. Campos , op. cit

TABLE 1

TABLE 2

See J.N. Behrman , op. cit p. 81.

Such exports are distinct from those destined for the parents' home market or other developed economies, so as to take advantage of low wages and other inputs in the LDCs.

Figures from J.L. Angel , Directory of American Firms Operating in Foreign Countries, 7th ed. ( New York: Simon and Schuster, 1969 ), as cited by E. Tironi , op. cit p. 205.

For example in petrochemicals, Dow Chemicals & Exxon had five subsidiaries in the six Andean countries and Du Pont had four. In electronics and electrical appliances, ITT had five, Westinghouse four, and General Electric three. In transport equipment, General Motors, Ford Motor Co. and Chrysler had three. In pharmaceuticals. Sydney Ross, Parke-Davis, Pfizer, Squibb & Wyeth had four subsidiaries. See E. Tironi, op. cit. p. 203. For earlier periods and much smaller countries like Central American nations in 1950 the situation is different as we will see later in this article.

United Nations, Department of Economic and Social Affairs , " Latin American Economic Integration and Foreign Private Investment," Paper presented at the panel of foreign investment in Latin America, Medillin , Colombia, June 1970, p. 8.

J.N. Behrman , op. cit p. 116.

See C.V. Vaitsos , The Rôle of Transnational Enterprises in Latin American Economic Integration Efforts (special publication by UNCTAD, Geneva (forthcoming)).

" The potential widening of the market through integration tends to accentuate fears and resentments which have come to the foreground particularly in respect to private foreign capital." See Unctad , Trade Expansion and Economic Integration Among Developing Countries, TD/B/85/Rev. 1, New York, 1967, p. 43.

Some exceptions exist in the cases of local resource based sectors such as parts of the food processing industry.

See A. Fuentes-Mohr , op. cit

J.A. Brewster and C.V. Thomas , The Dynamics of West Indian Economic Integration (Jamaica : Institute of Social and Economic Research, University of West Indies, 1973).

See P. Robson , Economic Integration in Africa (London: Allen and Unwin, 1968), and A. Hazlewood (ed.), African Integration and Disintegration: Case Studies in Economic and Political Union (London: Oxford University Press, 1967).

Unless otherwise indicated the figures presented below on Central America are, or have been estimated, from data in G. Rosenthal , The Rôle of Private Foreign Investment in the Central American Common Market (forthcoming).

The book value of U.S. investments in Central America was about $206m. in 1929 and $255m. in 1950. During the decade of the 1950s, when integration plans were being discussed, the corresponding U.S. presence went up to $350m. Ten years later and after the approval of the integration treaty, the book value of U.S. investments which had in the process tilted heavily towards the manufacturing sector, reached $859m- by 1969.

Gross intra-regional exports reached by the end of the 1960s about 25 per cent. of total Central American exports and manufacturing products accounted for about 80 per cent. of intra-regional trade. (Computed from various trade statistics between 1960 and 1971 as published by SIECA). Foreign firms in countries like Guatemala were reported as accounting for more than 40 per cent. of such regional trade.

Before integration, the average ad valorem tariff rate for consumer non-durables was 68 per cent. and after integration it reached 123 per cent. The corresponding figures were 27 per cent. and 42 per cent. for the durables, 31 per cent, and 35 per cent. for intermediates, 9 per cent. and 11 per cent. for capital goods.

G. Rosenthal , op. cit p. 111.

Computed from data in G. Rosenthal (forthcoming).

See 1. Cohen, Regional Integration in Central America (Lexington, Mass.: Lexington Books, 1972).

Even in very small economies the existence of national or foreign producers prior to integration could prove to be one of the major obstacles to the posterior evolution of regional integration. See for example comments on the impact of very tiny processing, repair and manufacturing units in blocking more serious economic co-operation between Nigeria and Dahomey in Reginald H. Green & K.G.V. Krishna , Economic Cooperation in Africa: Retrospect and Prospect (London: Oxford University Press, 1967).

J.N. Behrman. op. cit p. 116.

See C.V. Vaitsos , " Foreign Investment Policies and Economic Development in Latin America," Journal of World Trade Law, Vol. 7, No. 6, 1973; and C.V. Vaitsos. " Crisis in Regional Economic Co-operation (Integration Among Developing Countries)," World Development ( Oxford, forthcoming) and op. cit. (forthcoming) ; M. Wionczek. " La Reaccion Norteamericana ante el Tratado Comun a los Capitales Extrangeros en el Grupo Andino," Comercio Exterior, May 1978; The Economist, May 1978; E. Tironi , op. cit; H.C. Petersen , " Ancom: An Andean Paradox." Columbia Journal of World Business, Vol. 6, No. 4, August 1978, pp. 29-33; A. Ferrer , " El Capital Extrangero en la Economia Argentina," El Trimestre Economico, No. 150, April-June 1978.

See analysis references on this subject in G. Salgado.

See E. Gamon , "La Programacion Metalmecanica del Acuerdo de Cartagena y las Empresas Transnacionale." Mimeo, CEPAL/DIDE/ET Version Prelimilar/164, December 1976.