¹ The most comprehensive survey of direct overseas investment by United States firms is that of Pizer, Samuel and Cutler, Frederick, US. Business Investments in Foreign Countries: A Supplement to the Survey of Current Business (Washington: Office of Business Economics, Department of Commerce, 1960)Google Scholar. The United States Department of Commerce Survey of Current Business runs a regular feature on foreign investment; the most recent article in this series is Devlin, David T. and Kruer, George R., “The International Investment Position of the United States: Developments in 1969,” Survey of Current Business, 10 1970 (Vol. 50, No. 10), pp. 21–37Google Scholar. Another excellent recent source, though one unfortunately lacking in financial data, is Vaupel, James W. and Curhan, Joan P., The Maying of Multinational Enterprise: A Sourcebook. of Tables Based on a Study of 187 Major U.S. Manufacturing Corporations (Boston: Division of Research, Graduate School of Business Administration, Harvard University, 1969)Google Scholar; see also the essay by Louis T. Wells, Jr., in this volume.

² Dividends, interest, fees, and royalties from United States direct investments were $9.54 billion in 1969; see Devlin, and Kruer, , Survey of Current Business, Vol. 50, No. 10, table 5, p. 26Google Scholar. Corporate profits after taxes were $50.5 billion; see Survey of Current Business, 06 1970 (Vol. 50, No. 6), p. S-2Google Scholar. A recent survey of a number of large corporations found foreign earnings equal to 26 percent of total earnings; see “Worldwide Profitability 1964: 117 U.S. Firms Report,” Business International, 06 11, 1965, P- 186Google Scholar. For a look at trends over time in both sales and profits see Magdoff, Harry, The Age of Imperialism: The Economics of U.S. Foreign Policy(New York: Monthly Review Press, 1969), pp. 179, 183–184Google Scholar.

³ Rolfe, Sidney E. and Damm, Walter, eds., The Multinational Corporation in the World Economy: Direct Investment in Perspective (Praeger Social Studies in International Economics and Development)(New York: Praeger Publishers [for the Atlantic Institute, the Committee for Economic Cooperation, and the Atlantic Council of the United States], 1970), p. 12Google Scholar.

⁴ Steiner, George A. and Cannon, Warren M., Multinational Corporate Planning (Studies of the Modern Corporation) (New York: Macmillan Co., An Arkville Press Book, 1966), p. 4Google Scholar. Hymer, Stephen has estimated that present trends could produce “a regime of 300 or 400 multinational corporations controlling 60% to 70% of the world industrial output.” Quoted in the Wall Street Journal, 12 7, 1970, p. 1Google Scholar.

⁵ Vaupel and Curhan, p. 11.

⁶ The quotation is from Steiner and Cannon, p. 120.

⁷ Rolfe and Damm, p. 26.

⁸ Vernon, Raymond, “Economic Sovereignty at Bay,” Foreign Affairs, 10 1968 (Vol. 47, No. 1), p. 122CrossRefGoogle Scholar.

⁹ Baran, Paul A., The Political Economy of Growth (New York: Monthly Review Press, 1957), p. 145Google Scholar.

¹⁰ Geertz, Clifford, Agricultural Involution: The Process of Ecological Change in Indonesia (Association of Asian Studies Monographs and Papers, No. 11) (Berkeley: University of California Press [for the Association of Asian Studies], 1966), pp. 135–136Google Scholar.

¹¹ Magdoff, p. 198. For a thorough analysis of the economic relations between the United States and Latin America in the period up to 1961 see Economic Commission for Latin America, External Financing in Latin America (New York: United Nations, 1965)Google Scholar.

¹² See Devlin, and Kruer, , Survey of Current Business, Vol. 50, No. 10Google Scholar, and the preceding four articles in the same series.

¹³ For supporters of the multinational corporation these negative effects are counterbalanced by contributions of foreign firms to exports and import substitution. Such an argument fails to deal with the question of whether foreign firms could be replaced by indigenously controlled organizations which would not be obligated to remit income abroad. It is also interesting that supporters of the multinational corporation see its activities as benefiting the balance-of-payments position of the United States over the long run, a position which would seem to rule out a positive effect on the balance-of-payments position of host countries. See Behrman, Jack, Direct Manufacturing Investment, Exports, and the Balance of Payments (New York: National Foreign Trade Council, 1968)Google Scholar, written in reply to Hufbauer, G. C. and Adler, F. M., Overseas Manufacturing Investment and the Balance of Payments(United States Treasury Tax Policy Study, No. 1) (Washington: Government Printing Office, 1968)Google Scholar.

¹⁴ Baran, pp. 228–233.

¹⁵ Mandel, Ernest, Marxist Economic Theory, Vol. 2, trans. Pearce, Brian (New York: Monthly Review Press, 1968), pp. 453–459Google Scholar.

¹⁶ Rippy, J. Fred, British Investments in Latin America, 1822–1849: A Case Study in the Operations of Private Enterprise in Retarded Regions (Minneapolis: University of Minnesota Press, 1959)Google Scholar.

¹⁷ Ibid., p. 184.

¹⁸ Devlin, and Kruer, , Survey of Current Business, Vol. 50, No. 10, table 6, parts A and D, p. 26Google Scholar.

¹⁹ Ibid., table 5, p. 26. Unfortunately, these figures are not broken down by industry or into the categories of “developed” and “less developed” countries.

²⁰ Vaitsos, Constantine, “Transfer of Resources and Preservation of Monopoly Rents” (Paper presented at the Conference of the Development Advisory Service of Harvard University, Dubrovnik, 06 1970). PP. 63–64Google Scholar.

²¹ Hirschman, Albert O., How to Divest in Latin America and Why(Essays in International Finance, No. 76) (Princeton, N.J: International Finance Section, Department of Economics, Princeton University, 1969)Google Scholar.

²² Figures are taken from Devlin, and Kruer, , Survey of Current Business, Vol. 50, No. 10, table 6, pans B and E, p. 29Google Scholar, and previous articles in the same series; figures for Africa exclude the Republic of South Africa. Note that the difference between Latin America and Africa is not due to differences in profit rates; rates of return are higher for Africa.

²³ This is essentially the position of Johnson, Harry G. in his recent essay, “The Efficiency and Welfare Implications of the International Corporation,” in The International Corporation: A Symposium, ed. Kindleberger, Charles P. (Cambridge, Mass: M.I.T. Press, 1970), pp. 35–56Google Scholar.

²⁴ Singer, H. W., “The Distribution of Gains between Investing and Borrowing Countries,” American Economic Review, 05 1950 (Vol. 60, No. 2), pp. 473–485Google Scholar.

²⁵ For a good analysis of “enclave investment” see Rollins, Charles E., “Mineral Development and Economic Growth,” Social Research, Autumn 1956 (Vol. 23, No. 3), pp. 253–280Google Scholar. For a more theoretical approach Albert O. Hirschman's idea of backward and forward linkages is useful; see his book, The Strategy of Economic Development (Yale Studies in Economics, No. 10) (New Haven, Conn: Yale University Press, 1958), pp. 110–112Google Scholar.

²⁶ Baran, p. 197.

²⁷ See the tabulation on p. 679. Not only are die earnings on extractive investments high, the proportion remitted to United States parent companies is also high. In 1969 income received by United States parent companies on investments in less developed countries amounted to 19 percent of book value in mining and over 29 percent in petroleum; see Devlin, and Kruer, , Survey of Current Business, Vol. 50, No. 10, table 6, parts A and E, pp. 28–29Google Scholar.

²⁸ See, for example, Vernon, Raymond, “Foreign Enterprises and Developing Nations in the Raw Materials Industries,” American Economic Review 05 1970 (Vol. 60, No. 2), pp. 122–126Google Scholar. Vernon also discusses the role of the oil companies in maintaining artificially high prices. See also Tanzcr, Michael, The Political Economy of International Oil and the Underdeveloped Countries (Boston: Beacon Press, 1969)Google Scholar.

²⁹ Penrose, Edith T., The Large International Firm in Developing Countries: The International Petroleum Industry (London: George Allen and Unwin, 1968), p. 199Google Scholar.

³⁰ See Pizer, and Cutler, ; and Devlin, and Kruer, , Survey of Current Business, Vol. 50, No. 10Google Scholar.

³¹ See the discussion of the Roman Catholic church by Ivan Vallier in this volume.

³² Veblen, Thorstcin, The Theory of the Leisure Class: An Economic Study of Institutions (New York: Mentor Books, 1953)Google Scholar; see also Hymer's, Stephen discussion of “the international trickle down” in his article, “The Efficiency (Contradictions) of Multinational Corporations,” American Economic Review, 05 1970 (Vol. 60, No. 2), pp. 441–448Google Scholar.

³³ Marx, Karl and Engels, Friedrich, The German Ideology: Parts I and III (New York: International Publishers, 1960), p. 39Google Scholar.

³⁴ Belli, R. David, “Sales of Foreign Affiliates of U.S. Firms, 1961–65, 1967 and 1968,” Survey of Current Business, 10 1970 (Vol. 50, No. 10), pp. 18–20Google Scholar.

³⁵ The multinational corporations used in this estimate are from Vaupel and Curhan, pp. 6–8. Data on their advertising was found in “U.S. Industry's Ad Budgets,” News Front, 03 1966 (Vol. 10, No. 2), pp. 40–43Google Scholar. The percentage is based on firms included in both the News Front and the Vaupel and Curhan lists.

³⁶ Total recurrent public expenditure on education in Brazil was reported to be $148 million in 1966; see the UNESCO Statistical yearbook. 1968 (Paris: United Nations Educational, Scientific and Cultural Organization, 1969)Google Scholar. Sales of American manufacturing affiliates may be interpolated for 1966 at about $1.44 billion (Belli, , Survey of Current Business, Vol. 50, No. 10)Google Scholar which, under our method, results in an estimate of resources devoted to advertising of $57.6 million or 39 percent of education expenditures of Brazil. Inclusion of European subsidiaries and investments suggests an allocation of resources to advertising by foreign-owned manufacturing firms approaching total recurrent public expenditures on education.

³⁷ Mich, Ivan, “Outwitting the 'Developed' Countries,” New York Review of Books, 11 6, 1969 (Vol. 13, No. 8), p. 20Google Scholar.

³⁸ Baranson, Jack, Industrial Technologies for Developing Economies (Praeger Special Studies in International Economics and Development) (New York: Frederick A. Praeger, 1969), p. 73 and chapter 6, passimGoogle Scholar.

³⁹ Richman, Barry M., Industrial Society in Communist China: A Firsthand Study of Chinese Economic Development and Management (New York: Random House, 1969), pp. 805–809Google Scholar.

⁴⁰ Veblen, Thorstrin, Imperial Germany and the Industrial Revolution (New York: Viking Press, 1942), especially p. 38Google Scholar.

⁴¹ See March, James G. and Simon, Herbert A., with the collaboration of Harold Guetzkow, Organizations (New York: John Wiley and Sons, 1958), pp. 137–165Google Scholar, for a discussion of the cognitive limits on rationality. See also Lindblom, Charles E., “The Science of Muddling Through,” in Public Administration: Readings in Institutions, Processes, Behavior, ed. Golembiewski, Robert T., Gibson, Frank, and Cornog, Geoffrey Y. (Chicago: Rand McNally & Co., 1966), pp. 293–304Google Scholar, for a similar perspective. Donald P. Warwick's essay in this volume provides some good examples of bounded rationality in a public organization. For a discussion of the differences in perspective among the different functional segments of private corporations see Lawrence, Paul R. and Lorsch, Jay W., with the assistance of Garrison, James S., Organization and Environment: Managing Differentiation and Integration(Boston: Division of Research, Harvard Graduate School of Business Administration, Harvard University, 1967)Google Scholar.

⁴² Frank, Andre[w] Gunder, Capitalism and Vnderdevelopment in Latin America: Historical Studies of Chile and Brazil (New York: Monthly Review Press, 1967), p. 161Google Scholar.

₄₃ Furtado, Celso, The Economic Growth of Brazil: A Survey from Colonial to Modern Times, trans. Aguiar, Ricardo W. de and Drysdale, Eric Charles (Berkeley: University of California Press, 1963), p. 177Google Scholar. Albert O. Hirschman's discussion of the Kemmerer mission in Chile provides a parallel analysis; see his Journeys toward Progress: Studies of Economic Policy-Making in Latin America (New York: Twentieth Century Fund, 1963), pp. 175–183Google Scholar.

⁴⁴ United States Department of Commerce, Brazilian Income Tax Legislation (Overseas Business Reports, No. 67–26) (Washington: Government Printing Office, 1967)Google Scholar.

⁴⁵ On the practical side see Vaitsos; for some theoretical arguments see Johnson, in Kindleberger.

⁴⁶ Landes, David S., “Technological Change and Development in Western Europe 1750–1914,” in The Cambridge Economic History of Europe, Vol. 6, Part 1Google Scholar: The Industrial Revolutions and After: Incomes, Population and Technological Change (I), ed. Habakkuk, H. J. and Postan, M. (Cambridge: Cambridge University Press, 1965), pp. 580–581Google Scholar.

⁴⁷ Gerschenkron, Alexander, “Economic Backwardness in Historical Perspective,” in The Progress of Underdeveloped Areas, ed. Hoselitz, Bert F. (Chicago: University of Chicago Press, 1952), pp. 3–29Google Scholar.

⁴⁸ For discussion of Japanese industrial organization see Broadbridge, Seymour, Industrial Dualism in Japan: A Problem of Economic Growth and Structural Change (Chicago: Aldine Publishing Co., 1966)Google Scholar; and Yoshino, M. Y., Japan's Managerial System: Tradition and Innovation (Cambridge, Mass: M.I.T. Press, 1968)Google Scholar.

⁴⁹ Some discussion of trends in European mergers can be found in Siekman, Philip, “Europe's Love Affair with Bigness,” Fortune, 03 1970 (Vol. 81, No. 3), pp. 94–99, 166, 168, 171Google Scholar; in “Europe's Merger Boom Thunders a Lot Louder,” Business Week., 11 23, 1968 (No. 2047), pp. 53–56Google Scholar; and in Rydén, Bengt, “Concentration and Structural Adjustment in Swedish Industry During the Postwar Period,” Skandinaviskf Bank.cn Quarterly Review, 1967 (Vol. 48, No. 2), pp. 51–58Google Scholar.

⁵⁰ See Baranson, Jack, Automotive Industries in Developing Countries(World Bank Staff Occasional Papers, No. 8) (Baltimore, Md: Johns Hopkins Press [for the International Bank for Reconstruction and Development], 1969), pp. 44–53Google Scholar.

⁵¹ The “miniature replica” idea was introduced by Edward, H. English in his examination of the Canadian situation, Industrial Structure in Canada's International Competitive Position: A Study of the Factors Affecting Economies of Scale and Specialization in Canadian Manufacturing (Montreal: Canadian Trade Committee, Private Planning Association of Canada, 1964)Google Scholar. For a broader analysis of the problems of industrial organization in poor countries see Merhav, Meir, Technological Dependence, Monopoly, and Growth (New York: Pergamon Press, 1969)Google Scholar.

⁵² Bottomore, T. B., Elites and Society (Baltimore, Md: Penguin Books, 1966), p. 108Google Scholar.

⁸³ See, for example, Smythe, Hugh H. and Smythe, Mabel M., The New Nigerian Elite (Stanford, Calif: Stanford University Press, 1960)Google Scholar. Goldthorpe, J. E. notes that Mackerere University graduates in East Africa often appeared as “indigenous expatriates” when they ventured into rural areas in An African Elite: Mackerere College Students, 1922–1960 (East African Studies, No. 17) (Nairobi: Oxford University Press [for the East African Institute of Social Research], 1965)Google Scholar.

⁵⁴ Faria, Vilmar, “Dependenciae ideologia empresarial” (Paper presented at the Ninth Latin American Congress of Sociology, Mexico City, 11 1969)Google Scholar.

⁵⁵ For further elaboration refer to the Arusha Declaration which may be found in Julius Nyerere, K., Freedom and Socialism: Vhurti na Ujamaa—A Selection from Writings and Speeches (New York: Oxford University Press, 1968), pp. 231–250Google Scholar.

⁵⁶ See Ianni, Octavio, Crisis in Brazil, tran Phyllis, s.Eveleth, B. (New York: Columbia University Press, 1970). PP. 127–19Google Scholar.

⁵⁷ For a discussion of the problems of the Chinese elite see Moore, Barrington Jr, Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World(Boston: Beacon Press, 1967), pp. 181–201Google Scholar. For a comparison of the experience of Japan with that of China see Allen, G. C. and Donnithorne, A. G., Western Enterprise in Far Eastern Economic Development: China and Japan (London: George Allen & Unwin, 1954)Google Scholar.

⁵⁸ For one example of the demise of local entrepreneurs see Galeano, Eduardo, “The Denationalization of Brazilian Industry,” Monthly Review, 11 1969 (Vol. 21, No. 7), pp. 11–30CrossRefGoogle Scholar. For more general discussion of the predominance of foreign capital in the case of Brazil see Quciroz, Mauricio Vinhas de, “Os Grupos Multibillionarios,” Revista do Institute de Ciencias Sociais, 01–11 1965 (Vol. 2, No. 1), pp. 44–80Google Scholar. Michael Kidron's work on India is illustrative in this regard; see his book, Foreign Investment in India (New York: Oxford University Press, 1965)Google Scholar. An interesting case study may be found in the analysis of one of the largest Latin American firms (Industrias Matarazzo, Reunidas F.) in “The Business Globe: Matarazzo—Not One Company but 300,” Fortune, 07 1960 (Vol. 62, No. 1), PP. 71–72. 77Google Scholar.

⁵⁹ For a good discussion of the latter distinction see “After the Arusha Declaration,” in Nyererc, pp. 385–409.

⁶⁰ The Organization of Petroleum Exporting Countries (OPEC) represents such an attempt, albeit, not an entirely successful one; see Tanzer, pp. 70–74.