In 70 years there and has since been widely discussed phenomenon of corporations, international by nature of its activity, which is directly connected with the extensive development of direct foreign investment. On the international corporations that are typically the largest firms in developed countries account for the bulk of international direct investment and international trade.
The main feature of the international corporation is its implementation of international direct investment from their home country to the host country.
The home country (home country) - the country where the head unit is an international corporation.
The host country (host country) - the country in which the multinational corporation has subsidiaries, associates or affiliates that are based on direct investments.
Targeted studies of international corporations began with the end of the 50s. Most of them are repelled by the theory of the "economy of scale" that allows multinational corporations to save on production costs by increasing output and transferring it to other countries.
Somewhat later emerged and took shape the technological direction of the theory of international corporations believe that their creation is explained by the technological superiority of companies in developed countries that provide companies abroad to perform additional operations, leaving the control of the advanced technology of the parent company.
Later arose the theory of international organizations, which tend to corporations reached a certain size. In Russia, the study of international corporations were primarily descriptive in nature
When searching for an answer to the question - why American corporations produce cars at its branches in Mexico? - Can distinguish at least two aspects - the territorial and international.
The territorial aspect assumes that every corporation seeks to gain access to the cheapest labor and natural resources, to reduce the costs of transporting goods and bypass customs and other trade barriers.
International aspect implies that the corporation, which has branches in several countries, perhaps taking advantage of the scale, more cost-effectively produce the goods than the number of independent corporations. In addition, it can manipulate statements in order to reduce taxes, to provide control of its remaining technology that is available only fully controlled subsidiaries.
International Corporation (international corporation) - a form of structural organization of a large corporation that has direct investments in different countries of the world.
International corporations are of two main types:
Transnational corporations (TNCs) - the parent company of their capital belongs to the same country, and has offices spread across many countries of the world.
Multinational corporations (MNCs) - the parent company of their capital belongs to two or more countries, as well as branch offices are located in different countries.
The vast majority of today's multinational corporations are in the form of TNCs. The division of multinational corporations TNCs and MNCs very tentatively, as in the present conditions the most important is not that the capital of several corporations owned by the parent company, and the global nature of its operations, investment and profit. In this sense, one can assume that all international corporations with at least one foreign affiliate that is based on direct investments.
However, it is obvious that the number of TNCs may then get into and very small firms. In 1974, the Economic and Social Council of the United Nations established the Commission on Transnational Corporations and the Center for the TNC as its working body, which was a recognition of the international community's growing role of TNCs in the international economy. The mandate of the Commission was, inter alia, a new study at the time of the phenomenon of transnational corporations and the development of a code of conduct of TNCs. Later the Commission was converted into the unit of the UN Conference on Trade and Development (UNCTAD).
The most characteristic features of TNCs are:
- Establishment of a system of international production, dispersed between many countries, but controlled from a single center;
- Intra-high intensity of trade between countries located in different departments;
- Relative autonomy in decision-making on the operating of home and host countries;
- The global structure of employment and cross-country mobility managers;
- The development, transfer and use of advanced technology in the framework of a closed korporatsionnoy structure.
International corporations have become a form of economic ties between the home and host countries, in many cases, independent of the decisions of national legislative and executive branches, and is subject to its Intra-corporate interests. Their cosmopolitanism overwhelming statehood countries in which they operate, has caused controversy between TNCs, on the one hand, and the countries of their home and host countries - on the other.
It is not developed any universal rules of international investing TNCs, although some of the international investment rather strictly regulated at the regional level, such as in Western Europe. Home countries generally regulate the behavior of TNCs through national legislation on corporations without making much distinction between TNCs and national corporations.
The host country also set the rules for the divisions of foreign TNCs in their territory on the basis of national laws on foreign investment. However, the negotiations conducted over several years as part of the UN Commission on TNCs under the auspices of the IMF and the World Bank, although not resulted in the adoption of certain agreed-upon rules of conduct TNCs, but led to the definition of certain common rules for international investment, which it is desirable to adhere to both multinationals as and host countries.
The main idea of the rules - to ensure maximum freedom of international capital movements, liberalization of domestic capital markets. Among the rules of international investment are as follows:
• The right of the entrance (right of entry). Means the rules under which TNCs are allowed to establish a branch in the territory of a sovereign state. Ideally, they involve no need for any permission from the authorities of the host country to make investments.
• Fair and equitable treatment (fair and equitable treatment). Provides for the granting legal status to foreign investors, not less favorable than domestic investors.
• Termination of the contract (contract termination). Means the right of the host country to unilaterally expropriate (nationalize) subsidiary TNK subject to compliance with applicable laws and payment of compensation for the normal investor.
• Settlement of disputes (dispute settlement). It is believed that the preferred method of resolving disputes between TNCs and host country are negotiated. If they do not work, the dispute in the majority of cases decided by the court of the host country on the basis of the applicable law or an impartial and independent tribunal based on the International Convention on the Settlement of Investment Disputes, signed by 115 countries under the auspices of the World Bank.
Multinationals its policies affect both the home country and in the host countries.
The main reason for the critics of TNCs in their home countries is that by creating production abroad, TNCs carry back the jobs that are lost for workers in the home country. In addition, from the point of view of the government, TNCs, creating foreign subsidiaries, taken away from the taxation of the profits, which result in taxes does not fall into the budget and can not be used to finance social and other socially significant programs in the home country.
As a result, many large TNCs 'home countries, workers' representatives and the state often express requirement for a tax on the outflow of domestic capital abroad or to any other restrictions on the international activities of TNCs. However, as the macro-economic analysis for the home country as a whole a positive result is more efficient use of domestic capital abroad is more than cover the negative effects that arise as a result of employment or reduction of the level of taxes collected.
Host countries in their relations with TNCs in most cases, fear of political pressure on their part and penetration in the industry related to national security. This leads to the adoption of laws restricting or even prohibiting foreign investment in certain areas. In addition, TNCs often meet opposition from local producers of similar goods that are not able to withstand foreign competition and require the government to take protective measures. However, in practice, in terms of low savings and lack of investment resources, a much larger number of host countries are seeking every possible way to attract TNCs by providing tax and other incentives, rather than restrict the inflow of foreign capital.
Between the parent company of an international corporation and its foreign affiliates is intense movement of capital and goods, which, as indicated above shall be considered as direct investment. The problem is that the prices at which the parent company sells goods to its branches and buys goods from them, often differ from the price of the free market.
Transfer prices (transfer prices) - prices differ from market prices Intra-trade between the countries are in different divisions of the same corporation and used to move profits and tax cuts.
In order to determine how far and in what direction the transfer price differs from the market, it is enough to know at what price the goods are delivered to a business unit of one of its foreign branches and at what price the same product is delivered to the same country independent buyer and seller.
In most cases, when a TNC aims to minimize tax in their country and import duties when importing goods to a foreign country, transfer prices are determined at the level significantly below market. At the same time, if the objective is to deduce from a high-tax profits earned in their own country TNCs imports of a foreign entity, any components at a significantly overvalued against the market, prices.
Intra-trade volumes reach impressive, but hard-to-accurate sizing. Therefore, transfer prices have a strong distorting effect on the account of the international movement of capital in the form of direct investment.
So, the main feature of the international corporation is its implementation of international direct investment from the home country, which is its parent unit in the host countries in which it has subsidiaries, associates or affiliates.
International corporations have the shape or transnational corporations (TNCs), the parent company that owns the capital of one country and has offices spread across many countries of the world, or a multinational corporation (MNC), the parent company that owns the capital of two or more countries.
The main idea informally recognized rules of international investment is to provide maximum freedom of movement of international capital markets and the liberalization of the national capital.
Trade between units TNC is based on other than market prices Intra-trade - the transfer price used to transfer profits, tax cuts and