Emergence of MNCs In a Historical Perspective

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The genesis of MNCs lies in transnational trading in early days conducted by the Greek, Phoenician and Mesopotamian merchants. After the fall of the Roman Empire, trade between nations become difficult.

When Europe and the Middle East steeped in feudalism resulting in wars between feudal lords and church prohibited trade with Muslim States. Later on, merchants/traders of Italy established trade who were considered the fore runners of the multinational firms.

The cities of Genoa, Venice, Florence and Pica became the supply depots of traders. Active transnational operations flourished with the development of banks and money lending agencies.

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Multinationals in the form of trading companies started in the seventeenth and eighteenth centuries. The Hudson Bay Company, the East India Company, the French Levant Company were the major transnational companies established in those days.

During the nineteenth century, huge foreign investment flowed from the Western Europe to the underdeveloped countries or Asia, Africa and America. England was the leading exporter of capital, followed by France, the Netherlands and Germany.

In the early twentieth century British Petroleum, Standard Oil, Ana Conda Copper and International Nickel were the major MNCs investing mainly in mining and petroleum industries.

The MNCs have attained their present dominating position in the world economy through a long process of growth. S.A. Cockeril Steel Works established in Persia in 1815, followed by several others such as Bayer of Germany in 1863, Nestle of Switzerland in 1967, Michelin of France in 1853 and Lever Brothers of U.K. in 1890.

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There are three phases in the growth of MNCs. The first phase lasted upto the 1st World War. The field was captured mostly by the European Companies such as Imperial Tobacco, Dunlop, Siemens, Philips, etc. The Growth of MNCs halted during the post-war period between 1930-1950 on account of recessionary situation prevailing the world over in those days.

During the second phase, covering the decades of fifties and sixties, American MNCs such as General Motors, Ford Motors and IBM emerged on the world scene.

The third phase of the growth of MNCs began since 1970s. This new era belonged to the European, German and Japanese MNCs.

In recent years, MNCs have also emerged from developing countries such as India, Malaysia, Hong Kong, Singapore, South Korea, Indonesia, etc.

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Based U.N. (1993) data, the number of MNCs in 1992 had exceeded 37000 and their global sales exceeded 5.5 U.S. dollar. American, European and Japanese companies are the world’s largest corporations.

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