Multinationals: The Game and the Rules: Multinationals and Developing Countries: Myths and Realities
Four assumptions are commonly made in the discussion of multinationals and the developing countries-by friends and enemies alike of the multinational company. These assumptions largely inform the policies both of the developing countries and of the multinational companies. Yet, all four assumptions are false, which explains in large measure both the acrimony of the debate and the sterility of so many development policies.
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The talk today is of the "changing world economy." I wish to argue that the world economy is not "changing"; it has already changed--in its foundations and in its structure--and in all probability the change is irreversible.
The world economic order born after World War II, to a large extent fashioned by the United States, was based on two fundamental principles-in monetary terms, the principle of fixed parities and the dollar standard (although the dollar was convertible into gold at the request of the central banks); in commercial terms, the principle of non-discrimination and free trade. Practically speaking, the United States was assuming the role played by Britain during its period of greatness. This lasted until August 15, 1971, when President Nixon suspended the convertibility of the dollar. Over the years, we witnessed the fantastic growth and development of the defeated nations, Germany and Japan, and the emergence of the European Community-developments encouraged by the United States. The stupendous economic expansion of the capitalist West is, without a doubt, the most remarkable feature of this postwar period. The even greater expansion of trade (particularly intra-European) appears in this respect to be both a cause and an effect.
The popularity of the U.S. economic model is waning. To put globalization back on track, President Barack Obama must articulate the benefits of open markets and free trade.
