ABSTRACT
Transnational corporations (TNCs) – also called multinational corporations, multinational enterprises, and global corporations – may be defined as firms that sell products in more than one country. They sell in countries other than their own both through exports from their home country locations and through sales from host country foreign affiliates (or subsidiaries) that have been created through the export of capital or foreign direct investment (FDI). According to the World Investment Report 2002, TNCs now number some 65,000 firms, and are associated with about 850,000 affiliates worldwide, with the world’s 100 largest non-financial TNCs accounting for more than half of total sales of all foreign affiliates (UNCTAD 2002). The emergence of TNCs as a central force in the globalization process of the last two decades is closely tied to two developments, one a consequence of a long-term historical, technological evolution and the other a consequence of institutional change in the world economy largely initiated and carried out by a small number of advanced economy nations. The first is simply the continuing but recently more dramatic fall in goods transportation and information transfer costs. The second is the determination in the 1980s by many in the largest advanced economies to initiate an international financial liberalization. To understand the latter as a unique historical event that occurred against the backdrop of the former, the history leading up to the financial liberalization of the 1980s needs to be briefly reviewed.
