The Practices of Multinational Enterprises and Their Impacts on Inequality Between World Economies: The Case of Peripheral and Semi-Peripheral Countries

The internationalization occurred in recent years has led to the increase in foreign investment, to greater number of partnerships and alliances between enterprises and to the increase in intra-industry trade. In the 70s began a process of deindustrialization in rich countries with a shift of global chains to the periphery. Emerging countries are now providers of low-skilled labour at low costs. Transnational corporations transfer the location of their production in accordance with the costs, tax benefits, industrial and trade policies, generating harmful consequences to peripheral countries, which are at the mercy of the global escalation of multinationals in search of extremely high levels of accumulation. In addition to economic power they hold political power and bargaining avoiding regulation and taxes, if problems appear they transfer the production process to other countries. Although multinational companies have had positive effects on the periphery, creating jobs and contributing to economic growth, the distribution of these benefits have been asymmetrical. They transfer their plants to other locations wherever convenient. The last four decades recorded profound changes in the nature of international interconnections: in the pace of growth of trade in goods and services, in the acceleration of the movement of flows of financial assets, in the speed in the creation and transfer of new technologies, in the development of new and more fast communication systems, and in the transfer and absorption of knowledge and information. These changes have brought important implications: all countries moved toward a world without borders, making national economies interdependent and making the international movement of goods, services, technology, information and knowledge much more important today than in any other time of humanity. From the 1990s we observe a remarkable increase in geographical diversification of international investments, with a growing and significant share of the “emerging countries”. The new mode of production shows that no country or region can be competitive on all products, and no company can be competitive in all locations. The result of this new "technological paradigm" is the increasing fragmentation in the production of manufactured goods and the distribution of production in multiple locations with reduced overall costs for multinational companies, through both the location of different segments of its operations in the most appropriate place and the purchase of components, parts and inputs from other enterprises worldwide, seeking to increase their competitiveness. Therefore, the aim of this study is to analyze, through a literature review, how the globalization process has been changing its geographic patterns of industrial location and investment, allowing the emergence of a new spatial configuration of the world economy. This new configuration is analyzed emphasizing the distribution of industrial production and investment among major regions, in particular highlighting the acceleration of inequality between the peripheral and semi-peripheral countries.