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⁴ United Nations, Department of Economic and Social Affairs, Multinational Corporations in World Development (UN Document ST/ECA/190).

⁵ Speech of Helmut Schmidt, minister of finance for the Federal Republic of Germany, before the opening plenary session of the International Industrial Conference, San Francisco, California, 17 September 1973. (Mimeographed.) Available from the Stanford Research Institute in Menlo Park, California.

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⁷ Tugendhat, Christopher, The Multinationals (London: Eyre & Spottiswoode, 1971), chapter 8Google Scholar.

⁸ For an interesting recent discussion, see Ragazzi, Giorgio, “Theories of the Determinants of Direct Foreign Investment,“ International Monetary Fund Staff Papers 20 (07 1973): 471 ffCrossRefGoogle Scholar.

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¹² See the extensive discussion of this product-cycle model of direct foreign investment in Vernon, Raymond, Sovereignty at Bay: Vie Multinational Spread of U.S. Enterprises (New York: Basic Books, 1971), chapter 3Google Scholar. For case studies of the same phenomenon, see Stobaugh, Robert B. et al. , “U.S. Multinational Enterprises and the U.S. Economy,” in US Department of Commerce, Bureau of International Commerce, The Multinational Corporation: Studies on U.S. Foreign Investment, vol. 1 (Washington, D.C.: Government Printing Office, 1972), section IIGoogle Scholar.

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¹⁵ Jagdish N. Bhagwati, review of Sovereignty at Bay, by Vernon, Ramond, in Journal of International Economics 2 (09 1972): 457Google Scholar; Hymer, Stephen, “The Internationalization of Capital,” Journal of Economic Issues, 03 1972Google Scholar.

¹⁶ See Reuber, Grant L., Private Foreign Investment in Development (London: Oxford University Press for the Development Centre of the Organization for Economic Co-operation and Development, 1973), p. 103Google Scholar; and Musgrave, Peggy, “Tax Preferences to Foreign Investment,” in US Congress, Joint Economic Comittee, The Economics of Federal Subsidy Programs, Part 2–International Subsidies (Washington, D.C.: Government Printing Office, 1972), p. 204Google Scholar.

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¹⁸ Reuber, p. 179.

¹⁹ Cooper, Richard N., The Economics of Interdependence: Economic Policy in the Atlantic Community, The Atlantic Policy Studies (New York: McGraw-Hill for the Council on Foreign Relations, 1968), pp. 101–2Google Scholar.

²⁰ See Cooper, Richard N., “The Nexes among Foreign Trade, Investment, and Balance-of-Payments Adjustment,” in United States International Economic Policy in an Interdependent World, Papers submitted to the Commission on International Trade and Investment Policy and published in conjunction with the Commission's Report to the President, Volume II (Washington, D.C.: Government Printing Office, 1971), p. 529Google Scholar.

²¹ See, for instance, Johnson, Harry G., “The Efficiency and Welfare Implications of the International Corporation,” in Kindleberger, , ed., The International Corporation, p. 47Google Scholar; and McKinnon's, Ronald I. discussion of Stephen Hymer's article, “The Efficiency (Contradictions) of Multinational Corporations,” in The American Economic Review, Papers and Proceedings 60 (05 1970): 452–53Google Scholar.

²² See Dunning, John H., American Investment in British Manufacturing Industry (London: George Allen & Unwin, 1958)Google Scholar; Brash, Donald T., American Investment in Australian Industry (Cambridge, Mass.: Harvard University Press, 1966)Google Scholar; Safarian, A. E., Foreign Ownership of Canadian Industry (Toronto: McGraw-Hill Book Company of Canada, 1966)Google Scholar; Hughes, Helen and Seng, You Poh, eds., Foreign Investment and Industrialization in Singapore (Madison, Wis.: University of Wisconsin Press, 1969Google Scholar); Reuber, chapters 5, 6.

²³ Hymer, , “The Efficiency (Contradictions) of Multinational Corporations,” p. 448Google Scholar. Hymer notes elsewhere: “It is little wonder, then, that those at the top stress growth rather than equality as the welfare criterion for human relations.” See his discussion, “The Multinational Corporation and the Law of Uneven Development,” in Bhagwati, Jagdish N., ed., Economics and World Order from the 1970s to the 1990s (New York: Macmillan Co., 1972), p. 125Google Scholar.

²⁴ See the discussion in Behrman, Jack N., National Interests and the Multinational Enterprise: Tensions Among the North Atlantic Countries (Englewood Cliffs, N.J.: Prentice-Hall, 1970), part IGoogle Scholar.

²⁵ MacDougall, G. D. A., “The Benefits and Costs of Private Investment from Abroad: A Theoretical Approach,” Economic Record 36 (03 1960): 13–35CrossRefGoogle Scholar.

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²⁷ Gilpin, Robert, The Multinational Corporation and the National Interest, report submitted to the US Congress, Senate, Committee on Labor and Public Welfare, 93d Cong., 1st sess. (Washington, D.C.: Government Printing Office, 1973)Google Scholar. For an analysis of how increasing capabilities of host countries, both developed and developing, are increasingly enabling them to foster this outcome, see Bergsten, C. Fred, “Coming Investment Wars?” Foreign Affairs (10 1974): 135–52Google Scholar.

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²⁹ Musgrave, p. 208.

³⁰ Müller, passim.

³¹ Hymer, Stephen H. and Resnick, Stephen A., “International Trade and Uneven Development,” in Bhagwati, Jagdish N. et al. , eds., Trade, Balance of Payments and Growth: Papers in International Economics in Honor of Charles P. Kindleberger (Amsterdam: North Holland, 1971), pp. 473–94Google Scholar.

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³³ ;Müller, pp. 78–83.

³⁴ The adaptation by international firms to factor endowments by sourcing labor-intensive activities in low-wage areas is described in Helleiner, G. K., “Manufactured Exports from Less Developed Countries and Multinational Firms,” Economic Journal 83 (03 1973): 21–47Google Scholar. With respect to the adaptation of techniques to factor endowments for a given country, it has been argued that opportunities for economical substitution are very limited; see Chudson, Walter A., The International Transfer of Commercial Technology to Developing Countries, UNITAR Research Report No. 13 (New York: United Nations Institute for Training and Research, 1971)Google Scholar. However, some authors have found evidence of considerable adaptation, at least in the sense that foreign firms do not use techniques that are significantly more capital intensive than local firms. See Mason, R. Hal, “Some Observations on the Choice of Technology by Multinational Firms in Developing Countries,” Review of Economics and Statistics 60 (08 1973): 349–55Google Scholar; Strassmann, W. Paul, Technological Change and Economic Development: The Manufac-turing Experience of Mexico and Puerto Rico (Ithaca, N.Y.: Cornell University Press, 1968), chapters 4, 5Google Scholar; Pack, Howard, “The Substitution of Labor for Capital in Kenyan Manufacturing,” Department of Economics, Swarthmore College, Swarthmore, Pa., 1973 (mimeographed)Google Scholar. Reuber (pp. 194–97) finds that adaptations of techniques to smaller scale for market-orientation investment were common, but that those to low labor costs were much less so.

³⁵ “Costs and Benefits of Multinational Enterprises in Less-Developed Countries,” in Dunning, John H., ed., The Multinational Enterprise (New York: Praeger, 1971), p. 244Google Scholar.

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³⁷ For some interesting data on US investment to five countries experiencing regime changes (right to left, or left to right) in the 1960s, see Rosen, Steven, “The Open Door Imperative and U.S. Foreign Policy,” in Rosen, Steven and Kurth, James, eds., Testing Theories of Economic Imperialism (Lexington, Mass: D.C. Heath Lexington Books, 1974)Google Scholar.

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³⁹ Phrase used in testimony by Danielian, N. R., president of the International Economic Policy Association, in US Congress, Joint Economic Committee, A Foreign Economic Policy for the 1970s, Hearings before the Subcommittee on Foreign Economic Policy of the Joint Economic Committee, Congress of the United States, 91st Cong., 2d sess., part 4–The Multinational Corporation and International Investment, p. 888Google Scholar.

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⁴¹ The importance of status was brought clearly to our attention by Professor Joseph S. Nye.

⁴² Brecher, Irving and Reisman, S. S., Canadian-United States Economic Relations (Ottawa: Queen's Printer, 1957)Google Scholar, cited in Kindleberger, , A merican Business Abroad, p. 4Google Scholar.

⁴³ Huntington, Samuel P., “Transnational Organizations in World Politics,” World Politics 25 (04 1973): 366CrossRefGoogle Scholar.

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⁴⁶ For example, see Levitt, Karl, Silent Surrender: The Multinational Corporation in Canada (Toronto: Macmillan of Canada, 1970)Google Scholar.

⁴⁷ Johnson, p. 38.

⁴⁸ Hymer, , “The Multinational Corporation and the Law of Uneven Development,” p. 125Google Scholar.

⁴⁹ This is likely to be particularly true for elites, who are not hungry for food but who thirst for status. See Gilpin, Robert, “Integration and Disintegration on the North American Continent,” International Organization 28 (Autumn 1974): 851–74CrossRefGoogle Scholar.

⁵⁰ For a brief summary, see Robock, Stefan H. and Simmonds, Kenneth, International Business and Multinational Enterprises (Homewood, III.: Richard D. Irwin, 1973), chapter 14Google Scholar, “The Legal Environment.”

⁵¹ OECD, Investing in Developing Countries: Facilities for the Promotion of Foreign Private Investment in Developing Countires (Paris: OECD, 1972)Google Scholar, describes different national arrangements in some detail, with a chapter on each OECD country.

⁵¹ The basic sources are OECD, Code of Liberalization of Capital Movements (Paris, 01 1969)Google Scholar and Amendments thereto (Paris, 04 1972)Google Scholar; and OECD Code of Liberalization of Current Invisible Operations (Paris, 03 1973)Google Scholar. The OECD Observer 55 (12 1971)Google Scholar provides a useful summary.

⁵³ Szasz, Paul C., “Using the New International Centre for Settlement of Investment Disputes,” East African Law Journal 7 (06 1971)Google Scholar.

⁵⁴ For a list of signatories, see the Seventh Annual Report of the International Centre for Settlement of Investment Disputes (Washington, D.C., 1973)Google Scholar. For some early discussions on the project, see International Legal Materials 3: 1174–76;4: 52444; 5: 820.

⁵⁵ O'Hare, P. K., “The Convention on the Settlement of Investment Disputes,” Stanford Journal of International Studies 6 (1971)Google Scholar.

⁵⁶ “Metzger, Stanley D., “American Foreign Trade and Investment Policy for the 1970's: The Williams Commission Report,” American Journal of International Law 66, no. 3 (1972): 548Google Scholar.

⁵⁷ See ICSID, press releases of 13 March 1974 and 24 June 1974. See also ICSID Document AC/73/5 (15 January 1974), which contains summary proceedings of the Seventh Annual Meeting, held on 27 September 1973, in Nairobi, Kenya.

⁵⁸ IBRD, Multilateral Investment Insurance, a staff report (Washington, D.C., 03 1962)Google Scholar.

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⁶¹ IBRD, Multilateral Investment Insurance, p. 21Google Scholar.

⁶² IBRD, Annual Report, 1971, p. 35Google Scholar. The 1972 Annual Report of the IBRD does not mention the issue; a letter of 29 June 1973 from a member of the Information and Public Affairs Department of the Bank, received by one of the authors, indicates that the proposed International Investment Insurance Agency was not at that time under active consideration by the Bank's executive directors.

⁶³ See Commission Memorandum on a Community Policy for Development Co-Operation, Summary (27 July 1971), Supplement 5/71, Annex, to Bulletin of the European Communities 9/10 (1971)Google Scholar; see also Supplement 2/72 to the Bulletin, and the Bulletin, 5–4 (1972), p. 95, and 5–10(1972).

⁶⁴ Ball, George W., “Cosmocorp: The Importance of Being Stateless,” Columbia Journal of World Business, 11–12 1967, p. 27Google Scholar.

⁶⁵ For an interesting argument that problems in the area of private international financial flows fundamentally reflect conflicts of governments with one another rather than with multinational enterprises, see Russell, Robert W., “Public Policies Toward Private International Financial Flows,” paper prepared for the Fifteenth Annual Meeting of the International Studies Association, St. Louis, Mo., 03 1974Google Scholar.

⁶⁶ Behrman, , National Interests and the Multinational Enterprise, pp. 161–72Google Scholar.

⁶⁷ Commission of the European Communities, Sixth General Report on the Activities of the Communities, 1972 (Brussels-Luxembourg, 02 1973), pp. 65, 204, 78–79Google Scholar.

⁶⁸ Ibid., p. 302.

⁶⁹ Ibid., pp. 204–5.

⁷⁰ Behrman, , National Interests and the Multinational Enterprise, p. 169Google Scholar.

⁷¹ Statement by MrBorschette, Albeit, member of the Commission, to the European Parliament, 12 02 1973, in Bulletin of the European Communities, 2–73, p. 35Google Scholar.

⁷² Leyton-Brown, David, “Governments of Developed Countries as Hosts to Multinational Enterprise: The Canadian, British and French Policy Experience” (Ph.D. dissertation, Harvard University, 1973), p. 423Google Scholar, cited in Nye, Joseph S., “Multinational Corporations in World Politics,” prepared statement before the Group of Eminent Persons to Study the Multinational Corporation, Geneva, 5 11 1973Google Scholar.

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⁷⁴ See, for instance, Market Power and the Law, a report of the Committee of Experts on restrictive business practices (OECD, Paris, 1970)Google Scholar.

⁷⁵ The computation is from Nye, “Multinational Corporations in World Politics,” and from Behrman, National Interests and the Multinational Enterprise. For discussions of the US embargo policy and the activities of the relevant committees, see Adler-Karlsson, Gunnar, Western Economic Warfare, 1947–1967 (Stockholm: Almquist and Wiksell, 1968)Google Scholar.

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⁸¹ Ibid., p. 186.

⁸² Goldberg, Paul M. and Kindleberger, Charles P., “Toward a GATT for Investment: A Proposal for Supervision of the International Corporation,” Law and Policy in International Business 2 (Summer 1970): 295–323Google Scholar.

⁸³ Ibid., p. 323.

⁸⁴ Ibid., p. 322.

⁸⁵ Malmgren, Harald B., “The International Organizations in the Field of Trade and Investment,” in United States International Economic Policy in an Interdependent World, vol. 2, p. 429Google Scholar.

⁸⁶ Rubin, Seymour, “Report on the Conference,” in International Control of Investment, p. 9Google Scholar. Even Kindleberger seemed to agree: “I am a little embarassed by the occasional reference to the fact that I have suggested that we need international rules for the international corporation, a sort of GATT. I do not feel very strongly about this: I just threw out the suggestion” (ibid., p. 249).

⁸⁷ Nicholas deB. Katzenbach, “The Realistic Prospects for Greater Political Integration and Organization of Developed Countries Related to Investment,” ibid., p. 69.

⁸⁸ Blake, David H., “Trade Unions and the Challenge of the Multinational Corporation,” Annals of American Academy of Political and Social Science, no. 403 (09 1972): 34–45CrossRefGoogle Scholar.

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⁹⁰ The report is listed as UN Document E/5500/Add.l (Part I), 24 May 1974. Part II consists of dissents and other comments by members of the group. The discussion of “institutional machinery and action” appears on pp. 34–41; the quoted phrase can be found on p. 40. The fact that the report appeared after this article had been completed and sent to the editors accounts for the relatively brief attention given to it here.

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⁹² This sentence was written before the publication of the report by the Group of Eminent Persons, but its conclusion seems to be supported by that report. The group did suggest that as a “longer term objective,” a “general agreement on multinational corporations” should be negotiated, but it argued that serious steps in this direction were premature at this time.

For a previous elaboration of the argument that vested interests of established international organizations would create pressures for coordination machinery rather than a powerful new operating agency to deal with multinational firms, see Walters, Robert W., “International Organizations and the Multinational Corporation: An Overview and Observations,” Annals of American Academy of Political and Social Science, no. 403 (09 1972): 127–38CrossRefGoogle Scholar.

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⁹⁴ UNCTAD, Restrictions on Exports in Foreign Collaboration Agreements in India (New York: United Nations, 1972), pp. 1–18Google Scholar; and UNCTAD, Restrictions on Exports in Foreign Collaboration Agreements in the Philippines (New York: United Nations, 1972), pp. 1–13Google Scholar. See also a discussion of these in the context of African countries' bargaining problems in Curry, Robert L. Jr, and Rothchild, Donald, “On Economic Bargaining Between African Governments and Multinational Companies,” paper presented at the Sixteenth Annual Meeting of the African Studies Association, Syracuse, New York, 11 1973Google Scholar.

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⁹⁷ The quotation is from the New York Times, 31 December 1973, p. 2. For an opposing view, see Bergsten, C. Fred, “The New Era in World Commodity Markets,” Challenge, Sept./Oct. 1974, pp. 32–39Google Scholar. A symposium on this subject, with contributions by Bergsten, C. Fred, Krasner, Stephen, and Mikdashi, Zuhayr, can be found in Foreign Policy, no. 14 (Spring 1974)Google Scholar.

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¹⁰⁰ Council of the Americas, Andean Pact: Definition, Design, and Analysis (New York: Council of the Americas, no date, but contextually set in late 1973 or early 1974)Google Scholar; particularly, “Implementing Legislation and Juridical Trends of ANCOM Members,” by DrMartix, Mary Mercedes. Her conclusion is that the ANCOM code “will be much milder than it looks on the books” (part 3, p. 39)Google Scholar.

¹⁰¹ John R. Pate, Jr., “Activities of Non-U.S. Companies and Governments in Peru,“ in ibid., part 4, p. 4.

¹⁰² “How Will Multinational Firms React to the Andean Pact's Decision 24?,” p. 62.

¹⁰³ Stopford and Wells, pp. 152–53.

¹⁰⁴ Ibid., chapter 8.

¹⁰⁵ Ibid., p. 154.

¹⁰⁶ Vernon, , Sovereignty At Bay, pp. 266 ffGoogle Scholar.

¹⁰⁷ Reuber discusses two cases in which firms were forced into a minority ownership position at the insistence of the host country. “Agreements were finally signed allowing managerial fees, royalties for technology, and guaranteed dividends which, in combination, far exceeded anything that… the firms had repatriated from these projects up to that time or hoped to repatriate later;… they were no longer prepared to reinvest earnings on the basis of future growth potentials. Lack of control over the direction of growth and the distribution of potential profits changed the fundamental purpose of the companies' involvement.” Reuber, , pp. 86–87Google Scholar.

¹⁰⁸ Hirschman, Albert O., How to Divest in Latin America, and Why, Princeton Essays in International Finance, no. 76 (Princeton, N.J.: Princeton University Press, 1969), pp. 4–9Google Scholar.

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