ABSTRACT
The visiting head of government and the secretary- general of The Organisation for Economic Co-operation and Development agreed that nothing should have higher priority than the goal of continuing and accelerating the rise in the productivity of their economies. German banking houses acted as transnationals in the late Middle Ages, financing wars and maritime traffic. Later, in the 18th century, vast joint stock companies such as the British East India Company and the Dutch East India Company assumed quasi-governmental functions in oversea territories they acquired. The one-sidedness of this relationship has resulted in a competition among states to entice transnationals with the most favorable conditions. Governments compete with each other in providing generous concessions to transnationals in order to have them invest in their state. Financial institutions might be tempted to funnel savings not into productive investment but into "bubbles".
