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Published by the United Nations Conference on Trade and Development - UNCTAD
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WORLD INVESTMENT REPORT 1997
Transnational corporations, market structure and
competition policy
Improving economic efficiency by making markets more competitive -- and thereby
serving development -- is subject to the same need to make choices. Given the particular
characteristics of developing countries -- low income levels, skewed distribution of wealth,
lack of infrastructure, low levels of education, asymmetries in information, to mention a few -
- the incidence of conflicts between market outcomes and competing objectives is often more
frequent in these countries.
For example, where foreign exchange is temporarily in limited supply, certain import
restrictions might be needed -- thus limiting contestability -- to ensure that critical imports are
not disrupted, e.g.,
that foreign exchange reserves are used for machine parts instead of luxury goods. Or, where a
country is characterized by dispersed rural communities, the market will often not provide
these with certain basic services (such as roads, telecommunications services and railways); in
these cases, governments might need to ensure that certain services reach segments of the
national market which otherwise could not support such services. They could do so, for instance,
by providing the services through state-owned enterprises or, where private operators are
involved, by providing these with market power so that services in less-economically viable
markets can be cross-subsidized from profits earned in larger segments of the market.48 A
policy alternative to consider in such a case would be more direct government involvement in
the form of subsidized provision of the services in question. The decision in this case -- whether
to allow concentration combined with cross subsidization or to provide subsidies -- would
involve a careful consideration of the quite different trade-offs associated with these two options
(possibly less efficiency in the market, on the one hand, versus a direct budgetary expense on
the other).
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Contents
Preface
Overview----French
----------------PART ONE
TRENDS
I. GLOBAL TRENDS
-A. Overall trends
--1. Trends
----(a) Characteristics of foreign-direct-investment booms
----(b) Cross-border inter-firm agreements and cross-border
--------strategic research-and-development partnerships
--2. International production
--3. Recent changes in regulatory frameworks
--4. Trends in technology flows
-B. Estimating actual investment in foreign affiliates
--1. Estimating "real" FDI
--2. The financing of investment in foreign affiliates
-C. The largest transnational corporations
--1. Highlights of the world's top 100 and the top 50
-----developing-country transnational corporations
--2. Future trends
Notes
II. REGIONAL TRENDS
-A. Developed countries
--1. United States
--2. Western Europe
--3. Japan
--4. Australia
-B. Developing countries
--1. Least developed countries
----(a) Trends
----(b) Prospects
--2. Africa
----(a) Trends
----(b) Prospects
----(c) South African transnational corporations and the economic
--------development of southern Africa
-------i. Growth pole
-------ii. Building the nest?
-------iii. Conclusions
--3. Latin America and the Caribbean
----(a) Trends
----(b) A regulatory shift
--4. South, East and South-East Asia
----(a) Trends
----(b) Does foreign direct investment create balance-of-payments
--------problems?
-------i. Singapore
-------ii. Malaysia
-------iii. Thailand
-------iv. China
--5. West Asia
-C. Central and Eastern Europe
--1. Trends
--2. Foreign direct investment and competition
--3. Conclusion
Notes
III. FOREIGN PORTFOLIO EQUITY INVESTMENT
-A. Linkages between foreign direct and portfolio investment
-B. Trends
--1. General trends
--2. Trends in outflows to emerging markets from the
-----principal source countries
-C. Investment mechanisms
--1. Venture capital funds
--2. International equity investment funds
--3. American depositary receipts and global depositary receipts
--4. Convertible bonds and bonds with equity warrants
-D. Some issues raised by FPEI
Notes
----------------PART TWO
FOREIGN DIRECT INVESTMENT, MARKET
STRUCTURE AND COMPETITION POLICY
Introduction
IV. FOREIGN DIRECT INVESTMENT, MARKET
STRUCTURE AND COMPETITION
Introduction
-A. Foreign direct investment, market structure and
----competition in host economies
--1. Inward investment and the contestability of markets
--2. Transnational corporations and host country market concentration
----(a) The positive correlation between transnational corporation
--------activity and industry/market concentration
----(b) The impact of foreign direct investment on host-country
--------market concentration
---------i. At-entry effects on concentration
---------ii. Post-entry effects on market concentration
--3. Firm behaviour and competition effects
----(a) Competitive behaviour, the efficiency of firms, and
--------impact on performance
----(b) Anticompetitive business practices
-------i. Collusion
-------ii. Monopolizing mergers and acquisitions
-------iii. Exclusionary vertical practices
-------iv. Predatory behaviour
--4. Inducing foreign direct investment by granting market power
-B. Foreign direct investment, market structure and competition in
----a globalizing world economy
--1. The emergence of regional and global markets
----(a) Foreign direct investment, efficiency and the structure
-----of regional/global markets
----(b) Competition effects
----(c) Integrated international production, market structure
--------and competition: the hard-disk drive industry
-------i. Industry characteristics and market-entry conditions
-------ii. Integrated international production in hard-disk drives
-------iii. Market structure and competition in the industry
-------iv. Globalization and volatility of market positions:
-----------the dynamics of competition in hard-disk drives
--2. International production, supply response and competition
--3. Conclusions
Notes
V. POLICY IMPLICATIONS
Introduction
-A. Investment liberalization
--1. Liberalization of entry and operations
--2. Limiting market-power inducements
----(a) Assessing costs and benefits
----(b) Minimizing anticompetitive effects
-B. The interface of foreign direct investment and competition law
--1. The growing emphasis on competition law
--2. Main elements of competition law
--3. Competition law and foreign direct investment
----(a) At-entry inward merger review
-------i. General trends
-------ii. Typical scenarios involving mergers and acquisitions
----(b) Outward merger review
----(c) Worldwide dominant positions
----(d) Post-entry competition issues
-------i. Ancillary agreements restraining competition
-------ii. Secondary effects
-------iii. Cross-border technology alliances
-C. Broader policy implications
--1. The importance of competition policy
--2. International cooperation
----(a) The need for international cooperation
----(b) Obstacles
-------i. Impediments to information access
-------ii. Limited enforcement cooperation
-------iii. Differences in competition laws
----(c) Existing cooperation arrangements
--3. Looking ahead
-D. Competition policy and market outcomes
--1. Naturally concentrated markets
--2. Competing objectives
----(a) Promoting development
----(b) Other objectives
Notes
References
Annexes:
-Annex A. Additional text tables
-Annex B. Statistical annex
-Annex C. Major instruments of foreign portfolio equity investment
Selected UNCTAD publications on Transnational Corporations
----------------------------------and Foreign Direct Investment
Questionnaire
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Book
information
UN Symbol: UNCTAD/ITE/IIT/5
Sales no.: E.97.II.D.10
Date of publication: 01/08/97
ISBN: 92-1-112523-5
No. of pages: 382
Price:
US$ 45
To order: Order
form
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