The global political economy of transnational corporations: a theory of asymmetric interdependence

The aim of the thesis is to investigate the interdependency relation between transnational corporations and states, as actors in the international political arena. The thesis extracts a theory of asymmetric interdependence, which to some extent explains the nature of this relation.

Transnational corporations now play a central role in creating values in the states in which they perform FDI projects. In many respects, this can be said to be a result of the globalisation of the world economy, and most distinctly from the globalisation of markets, making possible for these large transnational corporations to with ease shift production between increasingly similar national markets. This development has also given the transnational corporation the advantage of being able to, in line with the overall strategy of the firm, shift the activities in response to changing factor endowments or government policy and exploit differences between countries on a global scale. These firms’ decisions to invest or not invest in particular geographical locations and the resulting flows of capital, materials, components and finished products, as well as of technological and organisational expertise are clearly essential to economic development and welfare in areas in which these corporations operate. The world’s largest transnational corporations account for approximately four-fifths of world industrial output, and the 500 largest TNCs account for 90 percent of all the worlds’ foreign direct investment. About one third of world trade today consists of intrafirm trade within TNCs, and another third consists of TNC exports to nonaffiliates. In industries dominating worldwide foreign direct investment flows, the considerably increased mobility of the investments has eroded the ability of states to influence the activity of affiliates in line with state preferences.

Author: Jarblad, Andreas

Source: Luleå University of Technology

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