ABSTRACT
Corporations became increasingly transnational — even global — in reach as today’s advanced industrialized countries (the first world) gradually developed from national economies into one global economy. Many late
developers (the third world) faced — and still face — the prospect of a similar development in an environment where the corporations of the first world are penetrating their economies to varying degrees. A question that has divided development theorists for decades is whether the activity of transnational corporations (TNCs) breeds development or underdevelopment in the third world. Two rich and vibrant theoretical traditions with a contradictory view on the effect of TNC investment have argued their case for decades. However, there is a sign of reconsolidation in the literature, as a synthesized theoretical framework is emerging — one based on the implicit assumptions of conflicting traditions in development theory. This literature highlights the importance of context, and stress that both development and underdevelopment are plausible outcomes. The activities of some TNCs are conducive to development whereas the activities of others are not, and some host countries have characteristics favorable to development whereas others do not.
