European Multinational Enterprises in the Integration Process

  • Lawrence G. Franko


The European integration process has recently become an issue of growing interest and controversy. For some it has been an encouraging example, for others it has been a source of dashed hopes. It is not difficult to find those who think that there is no such thing as the Common Market or, if there is one, that it is not of much consequence. Such a conclusion seems irresistible when we observe Europe’s struggle with agriculture, or its abortive attempts at monetary union, fiscal and legal harmonisation, or an energy policy. Increasingly, however, suspicions of un-Common Market behaviour have been directed at large industrial enterprises, and at governments which seem to be aiding and abetting them through innovation in non-tariff barriers and subsidies to compensate for the lowering of tariffs.1 For example, the effects of governments’ purchasing behaviour have been apparent in acting to restrain trade in areas of interest to large industrial enterprises. Much of the unease, though, seems to have centred on industrial enterprises themselves, and particularly those in highly concentrated sectors. The Third Competition Report of the EEC, for example, points to what appears to be an intriguing and disturbing negative correlation between concentration (the small number of firms in a given industry) and the degree of integration in terms of the effects on intra-EEC trade.2


Foreign Investment Scale Economy Multinational Enterprise Home Market Foreign Subsidiary 
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  1. 1.
    Gary C. Hufbauer and John G. Chilas, ‘Specialization by Industrial Countries: Extent and Consequences’, Weltwirtschaftliches Archiv, Kiel, 1974.Google Scholar
  2. 2.
    European Communities, Third Report on Competition Policy ( Brussels-Luxembourg, May 1974 ).Google Scholar
  3. 3.
    For a complete description of the sample and methodology, see L. G. Franko, The European Multinationals: A Renewed Challenge to American and British Big Business (London: Harper & Row, and Stanford, Conn.: Greylock Press, 1976,)chap. i.Google Scholar
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    Lawrence B. Krause, ‘The International Economic System and the Multinational Corporation’, The Annals, September 1972, p. 97.Google Scholar
  5. 5.
    As cited in Isaiah Frank, The European Common Market (New York: Praeger, 1961) pp. 94 and 195.Google Scholar
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    On the role of technological advantage and product novelty in explaining international investment see: Raymond Vernon, ‘International Trade and International Investment in the Product Cycle’, Quarterly Journal of Economics, May 1966; and Richard E. Caves, ‘International Corporations: The Industrial Economics of Foreign Investment’, Economica, February 1971.Google Scholar
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    GATT, International Trade Geneva (various annual issues).Google Scholar
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    Raymond Vernon, ‘Competition Policy toward Multinational Corporations’, American Economic Review, May 1974.Google Scholar
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    For further data see Franko, op. cit., chap. vi.Google Scholar
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    The EC Commission itself has had occasion to bewail the fact that national purchasing preferences remain the rule rather than the exception in member countries. (See Pierre Collet, ‘Les marchés publics de fournitures restent trop cloisonnés dans la CEE’, Journal de Genève 1 November 1972.)Google Scholar
  11. 11.
    For a more detailed analysis of ME dumping in the absence of trade see: E. M. Graham, ‘Oligopolistic Imitation and European Direct Investment in the United States’, unpublished D.B.A. thesis, Harvard University, 1975; and L. G. Franko, op. cit., chap. vii.Google Scholar

Copyright information

© Gerard Curzon 1977

Authors and Affiliations

  • Lawrence G. Franko
    • 1
  1. 1.Congressional Budget OfficeU.S. CongressUSA

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