The sheer size, the seeming power, and the evident alternatives of transnational enterprises fill national leaders with a sense of diluted control over the economic life of their own countries.
The world economy has outrun the capacity of national governments and international institutions to regulate and control it. In particular, the largest transnational corporations wield enormous economic and political power. The number of multinational companies jumped from 7,000 in 1970 to 40,000 by 1995. If they were states, 50 companies would have appeared in the list of the world's largest one hundred economies in 2000. The five largest companies in the world have have combined sales greater than the total incomes of the world's poorest 46 countries. Multinational companies also hold 90 per cent of all technology and product patents.
As seen through the eyes of leaders of developing countries, transnational enterprises seem to have more options than the countries that the leaders represent. Mutual suspicion continues to exist because of the asymmetry in bargaining power and disagreements concerning the process of technology transfer, the development of natural resources, and the use of the environment.
Transnational corporations play an important role as owners, as partners in joint enterprises, and as suppliers of technology in the mining and manufacturing sectors of many countries. Their role has been viewed more positively in recent years, in response to their need for foreign exchange and their awareness of the value of foreign investment. Effective cooperation has proved possible by strict observance of the principle of sovereignty and a recognition that profit-seeking objectives must be pursued within a framework of long-term sustainable development.
The existence of these options in the hands of the multinational enterprise is not necessarily harmful to the developing countries. As long as the options are not exercised, the operations of the foreign-owned enterprise may well be benign. Even when they are exercised, the economic consequences may be helpful to the developing countries. It may be that developing countries are bound to feel a sense of vulnerability to world markets, irrespective of their policies towards multinational enterprises. It is not at all evident, for instance, that developing countries which exclude multinational enterprises from their territory do very much more than change the quality and form of their dependence. All still face the need to mobilize resources, internal and external.