Abstract
Regional integration in Europe influences many aspects of business life, including the multinational enterprises (MNEs). The questions to answer in Part I, dealing with Western Europe, will therefore be: (a) how does the process of regional economic integration affect the MN Es? (b) (in view of their powerful position, a very important question): how do multinationals view the process of economic integration — are they favourable to it or not? In Part II I comment briefly on similar developments in the CMEA area. The major issue will be the functions to be performed by the Socialist Common Enterprises (SCEs)
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References
While gradually losing a substantial degree of tariff and institutional protection, and becoming exposed to ever stronger foreign competition, the local firm willing to survive must (directly or indirectly) go multinational.
L. Zurawicky, Multinational Enterprises in the West and East, Aalphen a/d Rijn 1979, pp. 1827, 30–31.
Roughly speaking, this means then that none of the MNEs present in the Common Market discriminates between the national markets.
G. Curzon and V. Curzon (eds.), The Multinational Enterprise in a Hostile World Macmillan, London and Basingstoke 1978; see especially the chapter by L. G. Franko, ‘European Multinational Enterprises in the Integration Process’, pp. 58–67, and the following comments by U. Immenga and V. Umbricht. Franko, it may be recalled, found that contrary to expectations, it was not exports, but foreign direct investments, that dominated the MNEs’ operations in the EEC after the creation of the Common Market. Some explanations can be suggested. First, a dynamic approach should allow for growing demand. In order to meet these needs new investments are required. In such a situation the location of the new plant may be quite logically determined by the marketing advantage of bringing production closer to the consumer. Secondly, as Franko rightly observes, foreign direct investments taking the form of acquisitions of already operating firms make it possible for the MNE to penetrate a given market while at the same time eliminating at least one competitor there. Thirdly, I would follow Franko and other writers (see also chapter by M.F. van Marion in the same volume) in suggesting that despite the advance of integration the persistence of numerous national barriers to trade still calls for foreign direct investments to overcome these obstacles. Also, in some cases foreign direct investments can be considered a symptom of the higher stage of economic integration, in the sense that the institutional provisions facilitate the transfer of capital, allow for borrowing on other countries’ markets etc.
Because of the important role of intra-firm deliveries, and their long-term objectives, the MNEs might prefer to avoid additional currency risks and to refrain from any currency speculation on their own account, since they dispose of sufficient profit-generating potential from productive activities.
L. G. Franko, op. cit. p. 64–65
L. Zurawicki, op. cit. Chapter 4.
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© 1983 Wiener Institut für Internationale Wirtschaftsvergleiche (WIIW) (The Vienna Institute for Comparative Economic Studies)
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Zurawicki, L. (1983). Multinationals in the European Integration Areas. In: Saunders, C.T. (eds) Regional Integration in East and West. Vienna Institute for Comparative Economic Studies. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06071-9_10
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