MARCH 1980 - VOLUME 1 - NUMBER 2
Profits and Poverty: Multinationals in Africa
Since the mid-1970s, the literature in English on multinationals in Africa has not been large. The relatively independent investigations of real merit can be counted on one hand: Richard Sklar on Zambia (1975); Suzanne Cronje et al. on Lonrho (1976); Raphie Kaplinsky on Kenya (1978); and the collection by Carl Widstrand and Samir Amin (1975). Given the role of international actors in African development, that is a depressingly small effort.
Africa Undermined and Distortion or Development? are thus most welcome. While both are open to some minor criticism for the way they define or carry out their objectives, they are overall good, readable efforts. Greg Lanning, a London-based journalist, set out to show in a light, semi-scholarly way how Africa's mineral wealth has not in the past and will not in the present or foreseeable future be of tangible developmental value for most Africans. Thomas Biersteker, a professor of political science at Yale, organized capitalist and Marxist perspectives on different aspects of multinational corporate behavior and then applied them to Nigerian development in the 1960s and 1970s.
These books do not, therefore, make highly comparable reading. Biersteker is much more the academic social scientist. The great value of his work is his willingness to examine critically the assumptions of both the opponents and the supporters of the global corporations. Virtually all preceding books on multinationals are written from either one ideological stance or the other. Lanning, for instance, is an explicit critic. He is light-handed in his language, presents complex ideas straightforwardly, and rarely overstates an argument. His evidence is primarily secondary works, industry publications, articles and interviews.
Looking first at Africa Undermined, one finds that the basic premises of Norman Girvan, Walter Rodney and Andre Gunder Frank are reflected in the histories of the Oppenheimer complex and DeBeers in Southern Africa, the Belgian-owned Unione Miniere in Zaire, and numerous others. The goals of the mining company are quite different from the development needs of human beings-even those few who work for the company. The success of the South African Chamber of Mines in controlling black mining wages is a compelling example of this. As Lanning observes, "In real terms, black earnings in 1969 were no higher and possibly lower than they had been in 1911, while over the same period real cash earnings of whites had risen by over 70 percent."
In case after case Lanning shows how the mining company extracts its profits, distorts local development, and perpetuates its control despite political instability, decolonizations and nationalizations. It boils down to a question of power, occasionally brute force but more often knowledge (both of technology and markets), resources and political influence.
Africa Undermined begins with historical sections, valuable for the general reader but offering little new to the area specialist. Too much space is probably devoted to South Africa here and certain sections are somewhat repetitive. The portraits of Zaire and Zambia could have been more up-to-date and specific. The last half of the book is much stronger. Here, the authors examine the major mining groups, offering much of benefit to researchers and activists alike. Corporate structures, operations, links, marketing and use of political power are all described in detail. The case studies of the underdevelopment of Botswana with World Bank aid and the departure of DELCO from Sierra Leone via liquidation "leaving a hole in the ground and in the government's pocket"-should be considered by every Third World government that thinks raw material export-led growth is the route to human welfare.
This is a very long book, in part because Lanning and Mueller sought to make it a basic reference on the subject. There are 38 tables and two long appendices providing the reader with listings up to the mid-seventies of every company, mine, owner, production expansion plan, and past activity in subsaharan Africa. The book lacks a bibliography, but contains excellent indices of company names and subjects and reasonably good referencing it should, in sum, serve as a good starting point for both the general reader and industry researcher for some time.
In Distortion or Development?, Biersteker faces two problems. One is to organize conflicting perspectives on multinational behavior into comparable propositions, and the second is to test these propositions through case studies in Nigerian development. He approaches the first task in a conventional academic style. Organizing assertions into opposing tables tends to simplify the real world. Categories appear, relationships disappear. The reader must judge the integrity of this approach carefully.
Among the multinational critics, Biersteker leaned heavily on the Latin American dependency writers, and Osvaldo Sunkel in particular. He provides a fair-minded summary of the critics of the multinationals. For what he terms the "neoconventional perspective," Biersteker chose the works of the Harvard Business School Multinational Enterprise Project in general, and Raymond Vernon in particular. He assesses issues such as capital movements, technology transfer, consumption patterns, social stratification and income distribution. The 'book persuades the reader that partisans of both sides could learn much from certain of the assumptions and issues one side or the other ignores or uncomfortably slides around.
Biersteker then moves through a brief history of international business in Nigeria to interpret the information he gathered on 60 foreign and domestic firms and their behavior over the decade of 1963-1972. He used both interviews and the files of the Industrial Surveys Division and the Central Bank. He reaches six conclusions: foreign-owned corporations contribute to net capital outflows, displace local producers in the Nigerian market and prompt a shift to inappropriate technologies, the results of skill transfer are unclear, inappropriate products and tastes arrive, and multinational corporations need the cooperation of the Nigerian business elite and government.
Overall, Biersteker finds several valuable assertions in the neoconventional Harvard Business School view, but argues that Nigerian evidence supports the multinational critics on balance. "On many points the critical perspective provides an equivalent or slightly better explanation, suggests more novel ideas, requires fewer limiting qualifications, raises as many important questions and can even accommodate unrefuted concepts from an alternative perspective." As Biersteker notes, the case for alternative development strategies in Nigeria which do not rely on multinationals is particularly strong, given the size of the country's population and potential market, as well as its oil wealth.
Distortion or Development is a fair-minded and discriminating book that leaves the reader with a substantial, but incomplete agenda for further research. As in most books on international corporations, the focus on the company and its relation to the host government slights the role of the corporation at both ends of the world system. We need more books that consider the corporation both in the global financial markets and among the Third World people outside the business elite, in the tumbledown urban slums and in the countryside. Meanwhile, these two works serve very good introductory purposes.
- Guy Gran>Guy Gran is an independent scholar of development based in Washington, D.C. He most recently published Zaire: The Political Economy of Underdevelopment (Praeger, November, 1979).
The formation of the Andean Pact in 1969 was widely regarded by scholars and political figures as a unique and potentially significant effort at Third World regional cooperation. In her book, Lynn Mytelka traces the history of the economic program of the six South American countries, and assesses the "tragedy and drama of the experiment," in which the countries attempted to collectively challenge the power of foreign corporations.
Focusing on the issue of "technology dependence," Mytelka examines the success of the six nations originally comprising the Andean group-Bolivia, Colombia, Ecuador, Peru, Venezuela and Chile, until its 1977 withdrawal-in extracting favorable terms from foreign corporations with respect to technology transfer. She explores the domestic forces working in opposition to the strict regulation of foreign capital, and difficulties encountered in enforcing guidelines established by the Andean group.
Mytelka's primary aim is to determine how regional cooperation can be used as an effective development strategy. She consequently extends her discussion to encompass an analysis of corporate power on a global scale, again emphasizing the importance of multinational corporate control over industrial technology.
International Documentation Center (IDOC)
Based in Rome, the International Documentation Center is perhaps the most valuable European clearinghouse for information on economic development and foreign investment. Since 1975, IDOC has utilized a computer-like filing system to organize data on individual developing countries and specific multinationals.
The system, called OASIS, is based on a dictionary of about 1000 cross-indexed "key terms." When researchers request information on corporate activity in a nation or region, far example, computer cards on countries and companies are merged, furnishing references to relevant documents.
Information gathered at IDOC includes government reports, studies by international organizations, and research projects by private groups. The archives also include corporate financial data for multinationals from around the world.
The IDOC staff conducts document searches for activists and academics on request. While fees must be arranged in advance of any research, the organization often agrees to information exchanges. Furthermore, the staff is interested in receiving material from U.S. researchers for inclusion in its data bank. '
For more information, write:
IDOCAsia/North America Communications Center (A/NACC)
The Asia/ North America Communications Center is a research and documentation group established to systematically gather, analyze and publish information on U.S. economic, political and military involvement in Asia. The group, funded by private, non-profit organizations in Asia and North America, was founded in 1976.
The center publishes both primary source material and analytical studies on the U.S. role in Asia. Its work is especially valuable for researchers examining corporate involvement in the region. The center maintains a data base covering the activities of multinationals in East, Southeast and South Asia. In 1979, it published America in Asia, a research guide listing key sources of information on U.S. trade, aid and investment in the area.
The group regularly publishes Asia Monitor, a comprehensive quarterly news digest on relations between the U.S. and Asia, gleaned from regional English language newspapers and business magazines.
It has also compiled detailed listings of all multinationals with subsidiaries or affiliates operating in Asia. Each listing includes important names and addresses, historical data and all publicly-available corporate financial information.
For further information, or to request specific publications, write:
ReportsCapital Flight: Some Issues for Canadian Workers
This report, released in January 1980, examines the causes and implications of new patterns of investment by Canadian corporations. The study emphasizes a key transformation of capital flows in the Canadian economy in recent years. Since 1975, the country has become a net exporter of investment capital (direct investment and portfolio investment), representing a fundamental shift from its traditional role as a net capital importer.
The authors assign primary responsibility for this trend to increased overseas investment by Canadian firms, rather than changes in capital transfers by foreign-owned companies. It focuses largely on Canada's forestry and mining sectors, and is rich in documentation.
For a copy, write:
Latin American Working GroupThe Economic Impact of the Japanese Business Community in the United States
This 50-page report examines the economic impact of Japanese investment in the United States.
Japanese multinationals have established 210 manufacturing subsidiaries in the U.S., and hold a majority interest in over 1 100 non-manufacturing enterprises in the country. According to the report, this pattern of investment has resulted in significant benefits to the U.S. economy. The study concludes that Japanese firms-with investments in the U.S. approaching $3.5 billion have created directly over 81,000 jobs. Indirectly, Japanese investment is responsible for an additional 261,000 jobs, the report estimates.
The study also traces the growth of Japanese corporate activity in the U.S., and the relationship between the overseas expansion of the country's banks and its trading and manufacturing companies.
For a copy, write:
Unifilm Catalogue 1980
A vital resource for any activist engaged in educational activities around economic development, human rights and the power of multinationals, this 1980 film catalogue includes titles on subjects as diverse as regional studies, labor history and world health.
The main focus of the catalogue is Third World politics and economics. It includes films such as The Battle of Chile, a three-hour documentary on the 1973 overthrow of Salvador Allende, Bottle Babies, an expose on infant formula marketing, and Five Billion People, a 13-part background series on the world economy, with segments covering international banking, foreign aid, and multinationals in developing countries.
Rental prices average approximately $150 for one showing. For a copy of the catalogue, and further information on rentals and promotional materials, write:
Early Warning System
Published by the Ecumenical Center in Brussels, this concise newsletter is designed to quickly transmit information on legal developments affecting foreign corporate activity in Europe. It offers brief notes describing new legislative and regulatory measures set down by individual nations and the European Community.
Still in its first year of publication, the newsletter's main goal is to diffuse "leads" that will spur researchers to examine in more detail the potential impact of specific legislation, and to quickly inform activists of upcoming legislative debates.
While not an exhaustive directory of legislation, the newsletter is an effective vehicle for quick communication. It has not yet appeared on a regular schedule, but rather, when key developments occur.
For more information write:
Published eight times a year, Worldpaper incorporates reporting and analysis by professional journalists from around the world. The publication is written largely by its ten associate editors, who are affiliated with periodicals and daily newspapers from countries including Kenya, Japan, Rontania and France.
The magazine is distributed as an insert in newspapers on five continents. and claims a readership of 1.2 million. Its news emphasis is economic development, with a special focus on economic interaction between the industrialized and developing worlds.
Worldpaper, however, can by no means be considered an advocacy publication. The periodical's main goal is to expose readers of daily newspapers to basic issues of international relations and development. Past articles have examined deceptive transfer pricing by Del Monte in Kenya, the political influence of multinationals in the Third World, and nuclear power in India.
The subscription price is $10 per year. For more information, write: