control over their natural resources, more development assistance, fairer prices for raw materials, and better access for their manufactured goods in developed countries’ markets. New words Tariff – Tax imposed on a country’s imports from the rest of the world. Tariffs are levied at the point of entry, i.e., at the border or the airport. What are MNCs?
Multinational corporations (MNCs) are large companies that operate in several countries at the same time. The first MNCs were established in the 1920s. Many more came up in the 1950s and 1960s as US businesses expanded worldwide and Western Europe and Japan also recovered to become powerful industrial economies. The worldwide spread of MNCs was a notable feature of the 1950s and 1960s.
This was partly because high import tariffs imposed by different governments forced MNCs to locate their manufacturing operations and become ‘domestic producers’ in as many countries as possible. Box . End of Bretton Woods and the Beginning of ‘Globalisation’ Despite years of stable and rapid growth, not all was well in this post-war world. From the 1960s the rising costs of its overseas involvements weakened the US’s finances and competitive strength.
The US dollar now no longer commanded confidence as the world’s principal currency. It could not maintain its value in relation to gold. This eventually led to the collapse of the system of fixed exchange rates and the introduction of a system of floating exchange rates . From the mid-1970s the international financial system also changed in important ways.
Earlier, developing countries could turn to international institutions for loans and development assistance. But now they were forced to borrow from Western commercial banks and private lending institutions. This led to periodic debt crises in the developing world, and lower incomes and increased poverty, especially in Africa and Latin America. The industrial world was also hit by unemployment that began rising from the mid-1970s and remained high until the early 1990s.
From the late 1970s MNCs also began to shift production operations to low-wage Asian countries. China had been cut off from the post-war world economy since