This section examines the motivating factors behind the growth of Yugoslav enterprises in the DMEs. Wells1 has identified five major factors that have prompted the growth of LDC firms abroad: these include the search for cheaper markets, risk diversification, the defence of export markets, off-shore production and the existence of ethnic ties. Diversification has clearly been an important factor for Yugoslav firms setting up activities in the West: the 287 subsidiaries listed in Table 4.1 span 19 European, North American and Australasian countries. Generalexport, whose activities include trade, tour operating, hotels and catering, and air transport, has some 35 overseas operations in the DMEs; INA has set up 11 subsidiaries in 6 countries (many of which are travel agencies), whilst Interexport, Iskra, Unis, Elan and Gorenje have each established five or more subsidiaries in at least five countries. Ethnic ties with neighbouring countries and investments in support of exports to Western markets have also been principal motives for Yugoslav firms abroad. A similar pattern of diversification emerges in the banking sector, where two of the major banks (Ljubljanska Banka and Udružena Beogradska Banka) have 13 and 9 offices respectively operating in 10 and 9 Western countries.
KeywordsHost Country Profit Margin Sample Firm Foreign Subsidiary Hard Currency
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- 1.L. T. Wells, Third World Multinationals (Cambridge, Mass.: MIT Press, 1983).Google Scholar
- 3.See C. H. McMillan, Multinationals from the Second World, (London: Macmillan, 1987); and Soviet Investment in the Industrialised Western Economies and in the Developing Economies of the Third World (Washington DC: Joint Economic Committee, US Congress, 1979).Google Scholar
- 5.See M. R. Hill, ‘Soviet and Eastern European Company Activity in the United Kingdom, Ireland and Sweden’, in G. Hamilton (ed.), Red Multinationals or Red Herrings? (London: Pinter, 1986); and McMillan, Multinationals from the Second World, op. cit., pp. 86–8.Google Scholar