In fact, the outflow of profits, interests and royalties on foreign investments might very well grow out of all proportion to the inflows of such investments. The advanced technologies used by transnational enterprises, the source of most FDI, could be labour-saving rather than labour creating. It was hoped that globalisation would offer opportunities for the expansion of developing countries trade. Exclude them, and the share of developing countries would be much less. Improvement in the share of newly-industrialised countries notwithstanding, the terms of trade of all these countries have deteriorated in favour of advanced nations.
Transnational corporations are instrumental in perpetuating such unfair business practices.
Together with their governments they control almost 80 per cent of international trade in a great many commodities and a large portion of the flow of foreign investments. With the recent trend towards mergers and the acquisition of other enterprises, they have become the real economic empires in the new global economy, posing formidable challenges not only to the governments of developing countries, but to governments of advanced countries as well. And while there is no doubt that they could contribute to the increase of output in developing countries, help in the transfer of technology and make up for the shortage of investment and absorb part of the unemployed workforce in these countries, their contribution to development is in the end determined by global strategies conditioned only by the search for ever-higher profits. Globalisation also impacts on welfare provisions in both the South and the North. Increased globalisation of markets and production structures has not allowed the advanced industrial countries to resolve their unemployment problems.