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Multinational Business Enterprises: A New Category of International Organizations (Part #8)

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The main question raised by this preliminary study is how restrictive a definition of multinational corporations is required and whether it would be preferable to define criteria to separate groups of corporations of different degrees of internationality in order to cover all cases. It may prove to be the case that many small new corporations with subsidiaries in only a few countries are less ethnocentric and more international than many of the large corpora- tions.

It might be useful to distinguish between long-established corporations with international interests in many countries (mainly trading companies), large national corporations developing International Interests, and smaller corporations recently created as international companies by national corporations from a limited number of countries (usually two to four).

It would be an advantage to make any future criteria consistent with those employed to detect international non- profit organizations. The additional complexity of the more highly developed profit corporations may make it useful to reassess non-profit organization criteria in order to distinguish between the more and the less international in a similar manner.

The multinational corporation will become an increasingly important concept over the next few years as mergers and takeovers establish international economic empires. The corporations themselves will have to make great efforts, as some have already done, to become truly international in order to avoid nationalization, discriminatory tariffs or accusations of economic colonialism. They are faced with increasingly complex tax problems and the burden of double taxation, due to the lack of any international legal status or provisions for international non-governmental organizations (whether profit or non-profit).

One solution is the creation of special national legislation in each country to deal with multinational corporations which make their headquarters there. At present only the tax havens such as the Bahamas, Bermuda and Lichtenstein provide an adequate place where a large multinational corporation can establish its central activity. In the case of international non-profit organizations, Belgium is the only country with special legislation. An example may howe- ver be set by Peru where legislation has just been proposed to deal specifically with the tax problems of multina- tional corporations and their employees.

Another suggestion that has been made is that it is in the interest of national tax authorities and of such cor- porations that they should pay a single tax to a specially constituted international authority on the basis of their consolidated financial statements. This would avoid the necessity for the current highly complex network of bilateral conventions on double taxation. In view of the significance attached to these corporations as tools for the rational economic development of the world, such a body might alleviate another current problem by providing a source of development funds. The tax funds could be channelled through the United Nations to the countries in greatest need.

The role of the large multinational corporation in aiding the less developed countries has been frequently stres- sed. This is an important reason for listing these bodies in this Yearbook. Some of the specific functions that they can (but will not necessarily) perform which could contribute to general economic devleoprnent are, according to Roy Blough : to make sound and profitable investments in developing countries which for less broadly based com- panies would be too risky; to make use of a world-wide store of technological, managerial, and other knowledge and skills that are likely to be better adapted to the needs of the less developed countries than is the knowledge of business firms that have access only to home-country technology; to create jobs and stimulate the desire for education in the developing countries; to make use of their international communications system to help countries achieve the benefits of cooperation; and to provide developing countries with contacts with foreign markets without which their export trade and industries cannot be rapidly developed. It is to be hoped that listing these organizations in this Yearbook will contribute to a greater understanding of the role that they will play in developing world society together with the intergovernmental and international non-profit nongovernmental organizations.

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