665 



and most of the remainder in the United Kingdom and Switzerland. More than 

 60 per cent of these operations represented new establishments, 20-30 per cent 

 were acquisitions, and the remainder were expansions of existing direct invest- 

 ments. [It is probable that] many American firms began operations in the 

 European market for the first time."* 



NATIONAL CONTROL OF INTERNATIONAL CORPORATIONS 



The study identifies three sets of problems "created for national 

 control by the international mobility of business''; these are: 



Problems created, or allegedly created, by the foreign-owned enterprise for 

 the countries in which investment takes place ; problems created for the country 

 of the parent firm ; and problems created for host countries by the government 

 of the home country. 



Under the first heading are comjjlaints "that foreign firms do not 

 export enough, that they give preference to suppliers in the home 

 country and hence enlarge imports, that they igTiore local employ- 

 ment practices, that they do not contribute to local charities, that they 

 rob the country of research, that they interfere with national 

 planning." 



Under the second heading (control problems for the home country) 

 is the allegation that high mobility of these business establishments 

 offers the possibility of escape from both taxation and regulation, 

 including disclosure of operations. 



Under the heading of inter-governmental problems is the comment 

 that "In order to make its regulations effective in the face of interna- 

 tional mobility ... a country may be tempted to reach out to its firms 

 operating abroad. This involves the unilateral extension of jurisdic- 

 tion into areas of potential conflict with other jurisdictions." 



COMMERCIAL TRANSFERS OF TECHNOLOGY 



On the subject of international technological transfer, the study 

 reports : 



Nati:onal differences in technological skills and knowledge, like national 

 differences in the capital stock available per worker, can provide the basis for 

 profitable specialization and trade. But as in the case of capital, technical 

 knowledge is traversing national boundaries with increasing speed and in 

 increasing volume. The movement of technology is often associated with direct 

 investment abroad; indeed, the rationale for the investment may be special 

 technical knowledge embodied in a patented process or product. But increasing- 

 ly technology moves by itself, disembodied from capital movements. In 1965, 

 for example, residents of the United States earned over $1 billion in royalties 

 and licensing fees (excluding movie royalties), largely earnings on technical 

 know-how, and over $300 million of this was not associated with American direct 

 investment oi)erations abroad. 



9|f 3|* #1* r|5 *J* ^P ^^ 



The extensive trade in technology has two implications : first . . . differences in 

 production possibilities based on technology will gradually disappear over time ; 

 second, countries such as the United States, which have relied extensively on 

 new products for a strong export position, will find it increasingly difficult to do 

 so, since the new techniques of production may move in international trade 

 as easily as the new products themselves.^ 



lie Richard N. Cooper. "The Economics of Interdependence : Economic Policy in the 

 Atlantic Community. " A volume in the series "The Atlantic Policy Studies". (New York, 

 Published for the Council on Foreign Relations by McGraw-Hill Book Co., 1968), pages 

 82, 85. 



120 Ibid., pages 105-106. 



97-400 O - 77 



