Direct foreign investments, activities of transnational corporations and glabalization (Resume)

K. Kokaia, K. Shengelia, Candidates of Economic Sciences

One of the signs of modern globalization is increasing of significance of direct foreign investments. During the World War I they made up only 10 % of the total capital investment, while in late 1990s only their share tripled.

It shows us that the world economy switched from the world’s international market stage to the world producer stage. Transnational corporations often play the role of direct investors, since the confines of the national economy are too narrow for them. Exporting of a considerable part of output, opening of subsidiaries and creation of the single integrated network give transnational corporations a possibility for utilization of resources and competitiveness. At present time many large and medium firms invest lavishly in inculcation of innovations and creation of model devices. They not only create innovations, but also purchase inventions of small forms in order to bring them to massive production. A transnational corporation appears not only in user’s role, but in the role of innovations’ seller as well. Although, they create technologies and scientific subdivisions, first of all, for their own needs. Innovations that are not related to their directivity are often created here, but they can be sold to other firms. At present time, when scientific progress is hardly achievable, a transnational corporation can sell licenses for not very new innovations to developed countries, which appear as main purchasers of new technologies on the market. With appearance of new groups of exporting countries, direct foreign investments affirm the increase of foreign investments in globalization conditions and that of the volume of developing countries’ export investments. If in the first half of 1980s they made up 13 million USD, in 2004 this figure was 250 million USD. It is apparent from all the above stated that the modern world economy is developing in the single economic space, in which the main subjects are not the countries, but multinational companies and their alliances. At the same time we can observe the trends of their enlargement. Another fact is also noteworthy – in the international economy less attention is paid to circulation of these investments than to circulation of goods, there is no single international organization for regulation of foreign investments. If after the World War II there have been certain rules in the international trade, there is no such order in direct import investments. There exists the so-called “Uruguayan round” of 1987-1993, in which the following unique issues were included: intellectual property, trade aspects of investment rules, economic policy implemented by the state. During the “Uruguayan round” trade and services were the main issues, many of them were closely related to import investments. Proceeding from this, we can say that the traditionally shaped model of the international economy, which is based on commercial unions, cannot assess cooperation in relation with other countries. All this gives us the right to say that the economy of a new type, which is based on interrelation, starts to form in the economic space.