THEORETICAL BASIS OF TRANSNATIONAL CORPORATIONS

Introduction

The actuality of the topic. Fifty-one of the largest one-hundred economies in the world are corporations. Transnational corporations hold ninety percent of all technology and product patents worldwide, and are involved in 70 percent of world trade. They employ in their foreign affiliates about 80 million people. The United Nations has justly described these corporations as “the productive core of the globalizing world economy.”

I.A. Karimov, the President of the Republic of Uzbekistan, had already marked that “The XXI st century, obviously, will be the century of globalization in the international relations. In these conditions, the process of integration, the expansion of participation of sovereign states at the international institutes and the organizations are to be considered not only as historical inevitability, but also as a powerful factor of stability”. No wonder, in any sphere it is impossible not to come across to the influence of globalization.

It is known that, currently, the world states, almost all of them, can’t ensure anymore a stable development and growth based only their own forces. World governments perceive that the deepening of relations between countries, and also the more active and effective involving and integrating in the global economic cycle is the key factor of economic prosperity. Unfortunately, not all states can act alone on the world arena, especially the small ones. Some countries need support from other states, more experienced, stronger and with greater financial strength.

The impact of globalization can be seen in any country’s national economy. It is tough to describe national economies, world economy without globalization. The volume of world economy grows steadily. According to World Trade Organization data, the volume of world trade has been growing much faster since 1950 than ever. During 1950-2000, world trade has grown 20 times and manufacture 6 times.

In the process of economic globalization, on the arena of international economic relations appear new actors. One of them is transnational corporations that move their capital from several countries of the world under the influence of different factors and create an economic chain through which are moving enormous innovations and financial flows.

Transnationalization of production, its expansion outside their home state, has a significant impact on national economies, establishing their place in the world work division.

However, parallel with the development of external economic relations, is changing the state's role and its functions. The state start to gain new functions, functions appearing as result of the states competition in the process of attracting foreign capital flows in the national economy.

Attracting transnational corporations in the national economy is today the main objective of the competition process between states. World states, especially smaller ones, in development or in transition, being enticed by the financial sources of TNCs, are involved in an increasingly fierce battle to attract the necessary capital in the country. Paradoxically, but eventually also TNCs are those which take advantage of it the most.

Thus, addressing the impact of this process needs to be done multilaterally, to find the optimum solution of how to attract foreign capital flows in the national economy at the present stage, focusing on their efficiency and quality.

In last decades a lot of attention is given to transnational corporations. Today there is nearly no considerable process in world economy which would occur without the participation of transnational corporations. The transnational corporations have turned to the ubiquitous force forming modern and future shape of the world. They accept direct and indirect participation in world political and economical process.

TNCs carry out their activity in world economy system, but their influence extends on world politics that allows to recognize TNCs along with the national states, the international organizations. TNCs are not absolutely new phenomenon, and represent the special form of display of general law of development of capitalism, aspiration of the capital to the external economic expansion in the form of direct foreign investments. The manufacture which is carried out abroad, has a number of advantages which follow from distinctions of political and economic conditions between the country - basing of the TNC and a host country where branches of TNCs settle down in this plan: degree of security and cost of extraction and processing of natural resources; rates of wages of work; the labor legislation; the taxation; exchange rate; ecological standards; a political mode; the political culture, etc. These distinctions increase maneuverability of the multinational corporation on a world scene.

The basic line of TNCs - global operations. Huge thing for TNCs is the world market. Therefore the expansion of TNC is carried out internationally.

From the very beginning of TNCs' existence became object of rough economic discussions. One their activity was estimated as destructive, the emphasize became on negative consequences of industrialization. Others attributed a role of the main tool of world progress.

70th years have passed under the sign of negative estimations for TNCs as a factor of an aggravation of economic, political and social contradictions.

In 80th years, appreciable role of the TNCs was observed in economic development and in the permission of political and social problems. Previously, it came with the recognition of their enormous potential, a huge role in development of scientific and technical progress.

However, economic growth of TNCs on the political and social value is ambiguous. From the economic point of view it conducts to the growth of productivity and labor force, escalating of capacities of the goods and services, manufacture and national income. On the other hand, typical line of "transnational economy" is strong contrast between large TNC and the country as a whole with serious difficulties: unstable development of manufacture, inflation, unemployment, etc. From the social point of view, economic growth of the transnational corporation increases vacancy for the unemployment and capital opposition. They arrange tough policy concerning employment. During economic crises TNCs even are inclined to the big reduction of the personnel that conducts to a condition of sharp confrontation with trade unions. In other cases - the transnational corporations, on the contrary, guide social intensity in a society.

The object of my work is the activity of transnational corporations in the world economy.

The subject – the tendency of TNCs’ development during the world financial crisis.

The purpose of the given work - to consider the tendencies of TNCs’ development in the conditions of world financial crisis in modern international economic relations.

For this purpose it is necessary to allocate following the main tasks:

1. To open the concept and essence of the transnational corporation;

2. To define the role of transnational corporations in globalization;

3. The impact of world financial crisis to the activity of the activities of transnational corporations;

4. The reaction of TNCs to crisis.

THEORETICAL BASIS OF TRANSNATIONAL CORPORATIONS