Notes on
how market structure, competition
policy, international trade and integrated international production
managed by transnational corporations restrict developing countries national policies autonomy
By Róbinson Rojas Sandford- 2007
The international division of production managed by transnational
corporations is not new. Neither is new the type of barriers to
independent national economies created by the way in which
transnational corporations dominate markets either from the supply
side, or the demand side, or both. For example, on 1st May 1974 the
UN General Assembly adopted a declaration on the establishment
of a New International Economic Order, with the following principle
among many others: "Regulation and supervision of the
activities of transnational corporations by taking measures in the
interest of the national economies of the countries where such
transnational corporations operate on the basis of the full
sovereignty of those countries" ( See
General Assembly Declaration and Programme of action on the establishment of a New International Economic Order
) . Of course, neither this principle, nor the whole declaration
have become international law ever. What is new is the complexity
of global value chains in conditions of market openness
(unregulated markets) which gives gigantic corporate capital
limitless economic and political autonomy and restrict developing
countries' ability to create autonomous development planning, whose
mirror image is the widening global imbalances, destabilizing
speculation and growing flow of value added from poor countries to
rich countries.
In the last few years UNCTAD have been researching on the way in which developing countries openness to transnational capital restricts
the autonomy of developing countries governments for planning for development. Analysing
interdependence, international collective action and policy
space, UNCTAD
stated that... "pressures for greater openness, particularly
in an uncertain economic environment and an era
of dynamic structural change, have made it increasingly
difficult for countries to pursue their
own national policies for development and integration
into the global economy. The openness
agenda overlooks the fact that the advanced industrial
economies engaged in very active economic
policies in pursuit of their development, and
it ignores their history of building “hard States”
to guide that process...
Instead, by concentrating on market forces
and “getting prices right” to
maximize the gains from a
given pattern of factor endowments,
the openness agenda
has perpetuated a lopsided view
of the forces driving economic integration. It stresses the potential
gains from participation
in international markets while
downplaying adjustment costs, and it stresses convergence
tendencies while ignoring potential
sources of cumulative divergence.
As the previous sections have suggested, this
approach has its limitations. Trade is just one
among several interrelated factors shaping integration.
Its impact is largely contingent on the
presence of dynamic forces –-specialization, learning
and innovation, scale economies and capital
formation- – that do not respond in a simple or predictable
way to the incentives generated from
rapid opening up. Strengthening these forces requires
a series of complementary institutional
reforms and discretionary macroeconomic, industrial
and social policy measures. This implies
considerable diversity in the pattern of integration,
even among countries at similar levels of
economic development."
"Trade is just one
number of interrelated
factors shaping
reforms and discretionary macroeconomic, industrial
and social policy measures. This implies
considerable diversity in the pattern of integration,
even among countries at similar levels of
economic development.
Development strategies that successfully harness
trade to a strong growth dynamic will necessarily
lead to closer links with the wider international
economy, especially with neighbouring
economies. This will make the success or failure
of those strategies increasingly dependent on
trends and policies elsewhere...It is unlikely that the policy trade-offs will
ever be satisfactorily resolved by privileging external
goals, even as countries seek to maximize
the benefits from closer participation in the international
division of labour. Rather, stability will
depend, in part, on the ability and willingness of
individual countries to pursue policies that are
compatible not only with their own national objectives,
but also with the objectives and policies
of other countries. It is therefore necessary to find
common objectives among countries at varying
levels of development around which a stable pattern
of integration can be built."...
"Thus, contrary to the thrust of the openness
model, the search for economic stability and balance
is not between autarky and surrendering
national sovereignty to the expansive logic of markets. Nor does the latter provide the institutional
standard against which development success
should be judged. Rather, in an interdependent
world, the balance between economic welfare at
the national level and integration at the international
level will continue to hinge on an appropriate mix
of market forces, policy space and collective actions."
...(see TADR 2004, Ch. III, pp. 95-97,) |
