A/42/427
English
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BOX 3-3
The role of Transnational Corporations
- In 1983 chemicals accounted for roughly one-fourth of the stock of foreign direct investment in manufacturing in developing countries by companies from four leading countries – Japan (23 per cent). the united States (23 per cent), the United Kingdom ( per cent), and the Federal Hepublic of Germany (14 per cent).
- Agriculture. mining, and other extractive industries accounted for 38 per cent of the stock of U.S. investment in developing countries in 1983, 29 per cent of the stock of Japanese investment in 1983, 21 per cent of the total FRG investment in 1981-83. and 9 per cent of the stock of U.K, investment in 1978.
- Eighty to ninety per cent of the trade in tea, coffee, cocoa, cotton, forest products. tobacco, jute, copper. iron ore, and bauxite is controlled in the case of each commodity by the three to six largest transnationals.
Source: UN Centre on Transnational Corporations, Environmental Aspects of the Activities of Transnational Corporations: A Survey (New York: UN, 1985).
their development process. This has been somewhat influenced by these countries' needs for foreign exchange and their awareness of the role that foreign investment might play in providing it. Effective cooperation with TNCs is possible in creating equal conditions for all parties. This can be attained by a strict observance of the principle of sovereignty of the host country. For their part, many corporations have recognized the need share managerial skills and technological know how with host-country nationals and to pursue profit-seeking objectives within a framework of long-term sustainable development.
60. But mutual suspicions still exist, usually because of an asymmetry in bargaining power between large corporations and small, poor, developing countries. Negotiations are often made one-sided by a developing country's lack of information, technical unpreparedness, and political and institutional weaknesses. Suspicion and disagreements remain, particularly concerning the introduction of new technologies, the development of natural resources. and the use of the environment. If multinationals are to play a larger role in development, these conflicts and suspicions must be reduced.
61. Strengthening the bargaining posture and response of developing countries via a vis transnationals is therefore critical. Where nations lack indigenous capacity to deal with large TNCs, regional and other international institutions should assist. As indicated earlier, they could expand existing help in the form of model agreements with transnationals for different situations, such as lease agreements for the exploitation of
