Multinational Corporations (MNCs)

In the 1950’s, MNCs that had never conducted business overseas began to export products and build facilities outside of the United States.  Other countries reacted negatively to this approach, as they were fearful of a trade imbalance with their countries.  By the 1960’s, Europe, Latin America and other countries' competition had begun resisting direct investment, and began increasing competition worldwide.

American MNCs were facing competition that began to challenge the domination of American companies.   During this time, US companies exported more goods than they imported.  This positive trade balance helped cement American as a world economic power in the sixties. Starting in 1971, the US began running a trade deficit, and by 1987 it was at 57 billion. To see the trade deficit as of today, click here.  Due to the large trade deficit, many experts believe that America will eventually lose its superpower status.

In Exhibit 2.2 (Cateora, Gilly, and Graham, 2009, p. 31), you can see dramatic changes between 1963 and 2007. In 1963, the United States had 67 of the world's largest industrial corporations. By 1996, that number had dropped to a low of 24 while Japan moved from having three of the largest to 29 and South Korea from none to four. And following the great economic boom in the late 1990s in the United States, 36 of the largest companies were American; only 22 Japanese, and none were Korean.  Finally, GAZPROM is the first eastern European entrant into the top 100 global firms, ranking #52 in the most recent Fortune list.