Transnational Corporations in Central and Eastern Europe and in the Former Soviet Union: a Return or a New Beginning?

Abstract

The role of transnational corporations (TNCs) in the former socialist countries, the ‘transition economies’, can be analysed from various perspectives. A political-economy perspective would look primarily at the political and socio-economic consequences of the policies of these key global actors for the transition economies with the aim of understanding how they influence, for example, income distribution. A trade-policy approach would reveal the impact of integration of the former socialist countries into the interconnected web of the global markets on the global trading regime and on changes in the international division of labour. An entrepreneurial perspective would include the specific motivations of the international firms in the region, how their production, marketing and management practices in the transition economies differ from those in other parts of the world, and also the cost-benefit analysis of their activities. A systemic approach would look at the role and contribution of the TNCs to the institutional transformation, both at the enterprise level and in relation to building state structures, and would scrutinize the contribution of the transnational sector to the economic modernization process of those countries. A macroeconomic approach would raise such issues as the role of foreign capital inflows in savings, investments, exchange rate movement and in the balance of payments. There is, of course, another dimension — looking at the international expansion of the new private firms in Central and Eastern Europe and in Russia, at their external internationalization. In fact, an organic integration of those countries into the global economy would imply not only the ‘inward internationalization’, meaning the foreign direct investments in their territory, but also the international expansion of their firms.