The seven essays of this volume examine the international activities of firms originating in small countries, both in Europe and the Third World.
Carlos F. Díaz-Alejandro’s essay on Latin American multinationals is the most interesting piece of the volume. He shows how complex a panorama one discovers when observing Latin American multinationals— from Latin American–based subsidiaries of American or European multinationals branching out into subsubsidiaries in neighboring countries, to older Latin American industrial firms (especially from Argentina) setting up subsidiaries, to giant government enterprises either creating subsidiaries abroad or going after special overseas exploration or engineering contracts. Díaz-Alejandro finds that the “transfer of adapted technology to activities where fresh technological changes are becoming less frequent in industrialized economies is likely to involve institutional arrangements somewhat different from those surrounding investments that transfer rapidly changing technology. Indeed, it appears that horizontal LA EDI (Latin American Foreign Direct Investment) involves joint ventures, rather than the creation of fully owned subsidiaries, to a greater extent than EDI from industrialized countries” (p. 173). He also advances the hypothesis that “medium-sized firms have been on the whole more active than larger firms in adapting technology to conditions in semi-industrialized countries. In fact, most Latin American private EDI within the region has occurred in manufacturing branches such as light engineering—including automobile parts and machine tools, domestic appliances and other consumer durables, and textiles—activities in which mediumsized LA-owned firms have been active in import substitution for several years” (p. 173).
One barrier to Latin American investments in neighboring countries has been the “turbulent and not always profitable history of dealings with foreign investors, as well as a history of balance-of-payments crises, . . . reflected in most LA countries in regulations that complicate capital movements in general and EDI in particular whether incoming or outgoing. . . . Indeed, the twists and turns of restrictions, exemptions, and incentives in some LA countries may have the net effect of favoring EDI from outside Latin America relative to that from other countries in the area. A given LA country, for example, may have a smoothly working treaty with the United States to avoid double taxation of foreign investment but none with neighboring countries” (pp. 182–183).
J. Niehans’s piece on Swiss multinationals, based on five case studies, is full of valuable insights and hypotheses. The French case study by Bertin concentrates on government attitudes toward multinational corporations from small countries. The Australian study by H. Hughes focuses on that country’s behavior both as a host and investment supplier. A paper by L. T. Wells, Jr., concentrates on investments from less developed countries, mainly in the Far East. A paper by T. Agmon and D. R. Lessard examines to what extent access to capital markets might place small-country multinationals in a disadvantageous position in their access to world capital markets.
The essays of this volume focus attention on an important, but until recently neglected, phenomenon. They will, it is hoped, stimulate more in-depth research on the actions and impact of multinationals on smaller countries, especially in the Third World.
