Abstract

This work argues that transnational corporations, by their internal dynamics, disturb the pace of development in Third World countries. There is little consensus on what should constitute a national economy, despite the fact that the idea of economic nationalism has a long history. The concept that a geographic area should show a minimal degree of economic vitality as a condition for emergence into a nation state is largely foreign to political scientists and politicians. Similarly, economists do not base their analyses on nations. The developed western countries between about 1950-80 to some extent became models of national economies. Their economic complexity, strong interdependence between economic sectors, and developed industrial infrastructures were seen as the necessary complements of national sovereignty. But the most important factor in economic growth and development, capital, by its very nature is not tied to any country. The dynamics of capital of transnational firms, and more generally the movement of modern economy and society, tend to destroy the sense of economic nationality. The deterritorialization of the economy is not limited to growth of transnational firms. Such arrangements as joint ventures, licensing contracts, and agreements to share production blur the lines between nation states. Deterritorialization affects culture and power relations as well as economics. The Third World as a conceptual entity is destined to come to an end not only because of the transnationalization of productive processes and financial circuits but because of internal cleavages. The factors originally believed to be common to Third World countries have not proven to be as enduring as once thought. The ideology of a unified Third World has crumbled in the face of internal conflicts, the powerlessness of the Organization of African Unity, the rise of Islamic fundamentalism, and other forces. The great division between countries is not fundamentally into 3 but into 2: the developed and the underdeveloped. The impact of multinationals on development in the Third World is likely to include both increasing homogenization due to the weakening of state borders and increasing differentiation, which is the traditional consequence of capital accumulation. The growth in importance of services and the development of the informal sector are 2 exceptions that may avoid the impact of transnational firms.

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