Trans Internet-Zeitschrift für Kulturwissenschaften 16. Nr. August 2006

13.2. Issues of Internal and External Migration in Post-Soviet Central Asia
Herausgeberin | Editor | Éditeur: Dinora Azimova (Tashkent, Uzbekistan)

Dokumentation | Documentation | Documentation

Transnational corporations in global movement of capitals, technologies and migration processes

Muminova Nargis (University of World Economy and Diplomacy, Uzbekistan)


At the end of the 20th century changes in geopolitical structures of the world community, transformations of sociopolitical systems, the conversion from a postindustrial to an information-oriented society and other processes have caused the formation of a new global scale world community. In the new millennium the contemporary world has entered a qualitatively new phase of its development characterized by incremental rates of globalization. The last one represents the process of interaction of various world civilizations; political, economic, scientific-technical, legal and information interrelation, interaction and interdependence of different countries of the world. One of the basic sources of the globalization and an important component of internationalization is the phenomenon of transnationalization within the framework of which a certain share of manufacture, consumption, export, import, human resources and the income of the country depends on decisions of international centers outside this country. The main sphere of globalization is an international economic system. Transnational corporations (transnational corporation) act as a leading forces of the last one. They are both the result and at the same time the main characters of international economic system internationalization.

According to the United Nations Conference on Trade and Development (UNCTAD) data there were 63 000 transnational corporations with 800 000 foreign branches in the world in 2001(1). Investigating the activity of the transnational corporations, the UNCTAD systematically ranges them and analyzes the level of their transnationality.

Due to their active industrial, investment, and trading activities, transnational corporations control half of the industrial production in the world, two thirds of the international trade, about four fifth of the patents and licenses for new techniques, technology and know-how in the contemporary system of world economy.

Let us mention the UN criteria of their definition of a transnational corporation. Originally, since 1960, the firms which had an annual turnover exceeding 100 million of dollars and branches in no less than in the 6 countries were considered transnational corporation. Nowadays, after some changed specifications, the international status of the firm is regarded as determined by the size of its foreign actives and its share in the total amount of actives of the company, a share of foreign sales in the total amount of realization of the production and a share of the foreign personnel in a general personnel of the company.

The degree of a company’s transnationalization can be expressed by the following formula: Itr = (A f / A g + V f / V g + S f / S g): 3

I tr - an index of transnationality

A f - foreign actives, A g- general actives

V f - foreign branches sales volume of goods and services, V g- general sales volume of goods and services

S f - foreign branches staff, S g- general staff of workers of the company

Transnational corporations are the corporations, including parent (headquarter) ventures, and their foreign branches (affiliated companies). The parent enterprises control the actives of foreign branches in the states outside company’s parent country, generally, by capital participation. For active control the capital share of no less than 10 % of ordinary shares is accepted as normative bottom margin.

Systematically, UNCTAD ranks transnational corporations and analyzes the level of their transnationality. The developing countries receive objective information about transnational corporations from UNCTAD. For example, according to data of the World Investment Report 2001, the largest transnational corporation in the world are represented in the following table(2).

The company

The rank on volume of foreign actives

Foreign actives, % from all actives of the company

Foreign sales, % from total amount of sales

The foreign personnel, % from all personnel of the company

Index of transnationalization, %

Rank on an index of transnationalization

General Electric







ExxonMobil Corporation







Royal Dutch/Shell Group







General Motors







Ford Motor Company







Toyota Motor Corporation







DaimlerСhrysler AG







Total Fina SA





















Nestle S.A.







Volkswagen Group







Nippon Mitsubishi Oil Corporation (Nippon Oil Co.Ltd)







Siemens AG







Transnational corporations are non-conventional actors in international relations. Gradually, the sovereign states have to share - at first economically, and then politically - their authority with suprastate institutes of transnational capital. They became self-dependent economic institutions with their own specific structure and internal ways of development. The contemporary world economy is developing in the direction of a common free market, where the main actors of economic relations are not only countries, but most of all, transnational corporations and transnational strategic alliances (TSA).

Political aspects of transnational corporation activities are multilaterally estimated in the parent countries, the host countries and in the system of the world economy. Positive and negative political aspects of transnational corporations’ activity is possible to present as follows:

  1. Positive and negative political aspects of the transnational corporation activity for the parent country:

a) positive: the unification of economic and legal regulations; the growth of influence on host countries by means of export of organizational technologies, know-how and developed inside structure of the transnational corporations, the institutes in the sphere of the organization and management (norms of labour legislation and the anti-monopoly law, the taxation principles, the contract conclusion practices, etc.), which were generated in the developed countries ; the growth of incomes of shareholders, qualified personnel and employees of the transnational corporation; the effective world labour market formation; etc.

b) negative: the reduction of a state control; the evasion of the transnational corporations from taxes; the creation of political groups of transnational corporation lobbies, who influence governmental structures in upholding of transnational corporations’ interests; etc.

  1. Positive and negative political aspects of the transnational corporations’ activity for the host country:

a) positive: the attraction of foreign capital; the growth of manufacture and employment, the reduction of unemployment; the receiving of additional resources (the introduction of new technologies, the output of new kinds of production, the use of administrative experience and qualified workers, taken from foreign business practice); the stimulation of competition, revealing competitive local companies; the output of competitive export production on the world market, which promotes strengthening of the country’s foreign trade positions; the growth of the state budget incomes through the receipt of additional tax revenues; the unification of economic and legal regulations; etc.

b) negative: the contradictions between private interests of companies and national interests of host countries; the threat to state security and the sovereignty of host countries; obstacles to national companies, and their replacement of respective branches of national economy; the import of ecologically dangerous and out-of-date technologies; the existence of the certain risks of the transnational corporations’ investment strategy; the external control over a choice of specialization of the country in the world economy; etc.

  1. Positive and negative political aspects of transnational corporations’ activity for the world economy as a whole:

а) positive: the active industrial, investment and trading activity of transnational corporations; the assistance to economic integration and creation of steady economic relations between different countries; the achievement of globalization and internationalization of the world economy; the international regulation of manufacture and distribution of production ; the purchase and development of patents and licenses for new techniques, high technologies, know-how, achievements of a scientific-technological revolution; the resolution of the international labour migration problems; the reduction of break between development levels in the world economic centers and the periphery; etc.

b) negative: the increase of environmental contamination, irrational use of natural resources, global environmental problems; a leading position of the several largest transnational corporations in the international market; the possibility of the formation of the centers of authority, whose interests do not coincide with universal human aspirations; etc.

The transnational corporations’ activity in the world labor market, in its effective utilization of labor resources of both the industrially developed and developing countries, has unequivocally positive results.

According to the demographic forecasts, the population of developing countries will grow much faster (except China), than the population of industrially developed countries, at least, before 2030(3). At the same time, the share of the elderly part of the population will rise, and a smaller proportion of people will be engaged in productive labor in industrially developed countries. The lack of labor can be compensated for by the overabundant labor resources of the developing countries. The transnational corporations’ activity in these conditions is connected with:

It is necessary to note, that the legal aspects of labour migration of transnational corporations are controlled by the International Labor Organization (ILO) (created in 1919), the International Confederation of Free Trade Unions (ICFTU), World Federation of Trade Unions (WFTU), World Confederation of Labor (WCL), and the «International Code of Coduct in the industry», developed by the OECD and ILO.

Historically the development of transnational corporations has passed a number of stages(4). There are characterised the following four generations of the transnational corporations:

It is necessary to note, that the first prototype of contemporary transnational corporations were trading organizations of the 16th to the 19th centuries. Nevertheless, only one company in the political and economic development became the unique company - the East India Company of Great Britain, which had transformed from a commercial trading venture to a quasi-state organization, ruling over the conquered territories and colonies in the East.

Let us now address the history of the creation and activity of the East India Company. In essence, the British East India Company, was founded in 1600 and existed till 1858, i.e. till the moment of its liquidation, and was a charter joint-stock company. In the 17th century the East India Company belonged to the type of "regulative companies". On the basis of a charter granted by Cromwell in 1657, the Company finally changed into the joint-stock company similar to the modern type.

Trading organizations of the same type, of more compact and broader in scope, started to arise in Europe after Overseas Discoveries. By the 18th century they had been concentrated in the center of a huge system of world trade. With the global development of the world trade system, there was also a dynamic formation of institutes for the support of this trade development. Such institutes were banks and the joint-stock companies which financed the international commercial enterprises and campaigns. Thus was created the new world of commerce and industry - the capitalist system, encouraging commercial expansion on a national and international level. The rival of the British Company in the 17th century was the Dutch East India Company (1602 - 1798), and in 18th century the French (1664-1794). However, neither Dutch, nor French companies couldn’t accomplish the position of the British East India Company on the international scene.

After Restoration, the charter of 1661 had given the Company the first prerogative of a state government - the right to declare war and to make peace. In 1686 the Company had received further state rights: the stamping of the coins, the martial court, the full order of armies and a fleet.

Being an instrument of the foreign policy of Great Britain, the East India Company served as a link in diplomatic relations of the British Empire with France and Russia on the East.

By the middle of the 19th century, the Company carried out the all-round rule of India, and it possessed strategically important regions in the adjacent states: Iran, Afghanistan, Burma and China.

The Company amassed enormous incomes to the British Empire, being not only simply a commercial organization, but the state structure on Indian territory. The income was formed from 1) the land tax; 2) tributes from peoples under the protection of the Company (vassals); 3) monopolies; 4) the custom charges. The land tax was the main source of the Company’s income, raised from the big land owners (zamindary), from peasants (rayotvary), from villages (mausavar). The following income was the takings for the protection of the vassal territories, the takings for the allocation of a part of an army to vassal territories (subsidiaries), the salary for a reserve army. The monopolies for salt and opium which already had existed during the Mughal governors, were determined as the third part of incomes. The fourth type of income were the custom charges, the gathering of duties for the right of import/export of goods, and for coastal and navigation rights.

According to data of 1835-1840, the comparative analysis of annual incomes and expenses of the Company shows us an annual profit of the order of about 8,5 million £, which is reflected in the following tables(5).

The annual income of the East India Company,

according to the data of 1835-1840.

types of incomes

Land tax


Gatherings from peoples

The custom charges

income in £

13 431 222

4 000 000

1 121 000

3 063 678,5

income in %





The annual expenses of the East India Company, according to the data of 1835-1840.

The types of expenses

The sum of expenses in £


for military administration

1 643 980


for civil administration

2 000 000


for the army

9 474 491


The formation of annual profit, according to the data of 1835-1840.

The sum of annual income in £

21 615 901

The sum of annual expense in £

13 118 471

The sum of annual profit in £

8 497 430

The Regulating Act, adopted by British parliament in 1773, imposed a series of administrative and economic reforms on the Company. The substantive idea of the Act was the recognition of that fact, that besides being a trading organization, the Company had become the government on the Indian territory. Commerce was separated from the administration of the colony and was conducted by the Chamber of Commerce of the Company in London. At the end of the 18th and the beginning of the 19th centuries different discussions on how to govern India and a revision of the Company’s charter were held in the British Parliament. R equirements of interference into the Company’s affairs proceeded from free traders and block of industrialists. The main subject was the abolition of the trading monopoly.

Further changes in the legal position of the Company took place in 1833. The Act of 1833 was accepted on the initiative of the leading Whig party, and left the Company the right to govern India. At that time, the Whigs were the representatives of the commercial and industrial elites and the land owning aristocracy. They had an interest in the profits and in the development of the colonial trade. The Act of 1833 transformed shareholders of the Company into the simple creditors - owners of the mortgages on East Indies incomes. The Act had ordered the Company to sell out the commodity stocks, put an end to its trading existence and, as it was still a political organization, had transformed it to the entrusted agent of a crown.

By the time of the next prolongation of the Company's charter in 1853, English industrialists had essentially strengthened their economic and political positions. This was promoted by the activity of the free traders. The free traders’ struggle for strengthening of English industrialists’ positions also affected the relations of Great Britain and India. As the greatest part of the profit was received by large exclusive companies, and first of all by the East India Company, they became the main object of the free traders’ attacks. Since the last time that the Company's charter had been revised in 1833, the old control system of India based on heavy taxation, colonial wars and distribution of the received profit among a financial and political oligarchy, the former methods of the colonial administration became ever more obviously unsuitable. As a result, in November 1858, according to Queen Victoria’s manifest, the administration of India passed to the British crown and the East India Company was liquidated. After 1857 the Company existed till 1874, but only as a commercial enterprise.

The Company was involved in port construction and built out railway tracks, and telegraph lines, founded Universities in Calcutta, Bombay, and Madras in 1857. Christian missionaries were active in India. Consecutive reforms in public health services, primary and secondary education, language policy, gender relations, the status of Indo-Britons (children from mixed marriages) in India, were carried out. At the same time these processes also had negative consequences: the liquidation of cultural curiosities, the decline of traditional crafts and national crafts, etc.

During Warren Hasting’s period as Governor General of India the passionate orientalist, who encouraged scientific researches, equipped an expedition to Tibet, assisted the study of literature and divinity, jurisprudence and the natural sciences of the Indians, and on W. Jones's initiative, a member of the Calcutta court in the 70s of the 18th century, there was created an Asian society in Bengal. It was engaged in studying of the history and traditions of the people of Asia, geography, development of science, agriculture and trade, ethics, philosophy, languages, music, architecture and poetry. W. Jones had translated into the English language "The Biography of Nadir-shah" (1790), "The Persian grammar" (1771), different Persian and Turkish poems (1772), Calidasa's "Shakuntala ", whom he called an Indian Shakespeare (1789), and the "Manu’ Laws" (1794). All this can be characterized as the cultural contribution of the East India Company to the history of the people of the East and West.

Estimating the multilateral activity of the Company, it is necessary to mention its role in migration processes. The activity of the Company has generated two kinds of migration: internal and external. The first kind is the migration of the intra-Indian population from villages to the cities. The external one is the resettlement of the administrative personnel of the Company, clergy, bankers, merchants, Christian missionaries from England to India. First of all it was administrative staff, military officials, army, and etc.

Significant migration processes had occurred in the army, demanding reinforcement in human resources from both Europe and India. For instance we may consider the following data. The East India Company had divided its Indian possessions into three presidencies: Bengalese, Madras, Bombay. Each of them had its own army, consisting of Europeans and local inhabitants. For example, in 1826 the Europeans who served in India increased to 30 872, the Indians to 260 273, not counting the disabled people, whose number increased from about 10 000 to 12 000 persons. Europeans usually served in the royal armies (infantry and cavalry), in the military groups of the Company, artillery, and the corps of engineers. In 1830 Europeans numbering 33 971 person entered into the service of the British -Indian army, alongside with 179 885 of Indians. In 1837 the number of Europeans in the army was calculated to be 30 340 persons, of local residents to be 150 000. With the arrival of 20 267 Europeans, and of 89 474 Indians the total reached 109 741 in 1839. By 1842 the general British-Indian army consisted of 303 081 soldiers (13 000 disabled person inclusive)(6).

Besides the military contingent of external migration, the European society in India in the 19th century consisted of officials, serving in the Company, journalists, merchants, bankers, and particularly manufacturers of indigo. The last ones were ruined or acquired riches in a few years. In both cases they left the country, one - in order to use the quickly acquired riches in Europe, the others - in order to find a place where the poverty would be tolerable. In 1843 the number of manufacturers of indigo (temporary industrialists) totalled 12 900 persons in Hindustan: up to 7 500 in Bengal, the western provinces and Arakan, up to 1 400 in Madras, and up to 4 000 in Bombay(7). The aspiration to economic well-being was and remains the reason of steady mass migratory streams.

Some geopolitical, economic, political, social, cultural aspects of the East India Company’s activity can be traced in the activity of the modern transnational corporations. As the center of the world trade system was occupied by companies in the modern world similar to the East India companies, so nowadays the core of world economic system belongs to the world largest transnational corporations.

Similarly to the East India Company, modern transnational corporation serve as an instrument of foreign policy of the parent states on the one hand, and on the other hand, the transnational corporations represent some kind of competition to the national state and its sovereignty. The East India Company’s employees after their return to Great Britain from India with enormous treasures, titles and sprawling estates, which allowed them to obtain political power and authority, formed and developed a lobby group in the British parliament as spokesmen of their interests. Similarly now the transnational corporation in industrially developed countries create a powerful lobby, capable to influence governmental bodies to uphold their own interests.

It is also possible to draw a parallel between migratory processes of the Company and present international migration, where modern transnational corporations are active actors. The flexible military and political, financial and economic strategy of the Company had provided the British Empire in its struggle with the other European powers victory and definite domination over commodity markets, sources of raw material, and strategic territorial bases. The transnational corporations with their strategy and activity are providing to their parent countries superiority in the system of the international affairs.

Thus, the transnational corporations act as an instrument of foreign policy of industrially powerful states. The contemporary world is dominated by the strategic alliances of the large transnational corporations. Because of the transnational corporation’s expansion of its sphere of activity and the movement of capital there is a gradual disappearance of the economic borders between different states. This tendency signifies a certain danger to developing countries, aspiring to strengthen their national independence and sovereignty. But at the same time, market economy and an economic openness are necessary preconditions of the viability of the economy of any country and the global economy as a whole.

Successful integration of developing countries into the global economic communication demands not only cooperation, but also the creation of their own effective and competitive transnational corporations.

In the years of independence, there have been accepted a number of Presidential decrees, and laws of the Republic of Uzbekistan, governmental decisions determining Uzbekistan as a subject of international law, regulating foreign policy and foreign economic relations of the republic, creating strong legal guarantees for active and wide international cooperation.

High rates of economic growth of Uzbekistan are impossible without a steady growth of foreign investments and an export potential on the basis of the close integration into world economy. It is natural, that Uzbekistan, as well as any other country builds its external economic policy proceeding from own interests and from a respect of the interests of its partners. This policy is defined by the head of our state on the basis of a long-term strategic analysis and is directed to the creation of a balanced international trade and economic relations, creating the optimum for trading conditions, the attraction of investments for structural transformations of the economy.

The largest investment projects in the mining and oil-and-gas industry, in agricultural mechanical engineering, in the food-processing industry and transport infrastructure of republic are carried out with the participation of the foreign capital of:

The diversification of foreign trade has allowed Uzbekistan to optimize its orientation considerably. The share of raw material export was reduced and the share of finished goods export has increased. The share of food and non-food consumer goods was reduced, and the share of machines and equipment, of the modern technologies necessary for the achievement of modernization and the structural reorganization of the economy, has sharply increased in import.

The President of the Republic of Uzbekistan, Karimov I.A., had written in his book about the priorities in external economic, trade, scientific, cultural cooperation, the foreign infrastructure development by the creation of trade and information representations abroad (8).

The Decree of the President of the Republic of Uzbekistan "The Decree on Additional Measures on the Stimulation of Export of Goods (Works, Services)" of 1997 and the decision of the Cabinet of Ministers of the Republic of Uzbekistan "The Statement of Regulations about the ordering of customs registration of goods which are taken out of the country by subjects of the Republic of Uzbekistan through trading houses, representatives, and enterprises created by them in foreign countries" of 2000 determine the mechanism of domestic manufacturers’ production promotion on the markets of foreign countries by means of the creation of trading houses abroad.

The Cabinet of Ministers of the Republic of Uzbekistan has created the Complex for Foreign Economic Relations, who coordinates the activity of the Ministry for Foreign Economic Relations, Investments and Trade, NBU, "Asaka" Bank, the State Joint-Stock Company "Uzmarkazimpex", the Foreign Trade and Transport Company "Uzvneshtrans", the National Export-Import Insurance Company "Uzbekinvest" and other ministries, departments, organizations of republic.

The Complex for Foreign Economic Relations develops a national effective export strategy, proceeding from international experience, world market development and national export tendencies. With the active assistance of the Ministry for Foreign Economic Relations, Investments and Trade, the resident enterprises create a foreign infrastructure. The Ministry gives the enterprises a preliminary expert examination of investment efficiency outside the country, promotes the carrying out of marketing researches of investment projects and the expediency of the creation of an enterprise abroad.

Nowadays, the scope of external markets within the foreign infrastructure network consists of 27 countries. More than 396 enterprises and representations are created by residents of the Republic of Uzbekistan abroad. Such enterprises as the joint venture "UzDaewooAuto", the joint-stock company "Uzplodovoshvinprom-holding", the state joint-stock company "Uzbekyengilsanoat", joint-stock companies "Toshtukimachi", Bukhorotex", the joint venture "Sovplastital" are developing an active strategy of export production promotion by the formation and development their own infrastructure abroad.

Automobiles and spare parts for them, cotton yarn and the fabrics, an advanced agricultural production (dried fruits and preservation), cable-wiring production, building materials and others comprise the basic commodities.

Foreign enterprises with Uzbek investments are created in various organizational - legal forms. Common forms are affiliated and joint ventures with Uzbek shareholders, with an authorized capital of 51 % and more, i.e. a controlling share holding. The increase of the foreign infrastructure network is accomplished by the establishment of its objects by the parent companies, the joint ventures, which are carrying out the economic activities in Uzbekistan.

The potential opportunities of the national capital’s structure in world financial-economic structures have the wider repercussion. There are also other effective organizational forms of the presence on a foreign commodity market.

The transnational corporations act as leading forces of the international economic system. The study of the genesis of transnational corporations, the forms and scales of their activity, the participation of transnational corporations in international migratory processes, the analysis of an origin and forms of transnationalization in Uzbekistan, the consideration of expected perspectives for the national economic system because of the presence of transnational corporations in the national market, the definition of that segment of economy where the transnational corporations’ activity is the most essential, is the actual approach in strengthening the national economy in world industrial-economic mechanisms. The research, revealing of positive and negative aspects of the political and economic interaction of transnational corporations and the states in a framework of intra- and inter-regional communications is important for Uzbek political science.

Proceeding from the analysis of the positive and negative results of the transnational corporations’ activity, it is important to develop mechanisms of the legal regulation, and the control of cooperation of the state and the transnational corporations, their joint activity in the regulation of the migration processes, combining equality between the priority national interests and the transnational corporation interests, and finally to create resident effective and competitive transnational corporations of their own, and by providing security and stability in political, military, economic, humanitarian and legal ways.

© Thomas Loy (Zentralasien-Seminar, Humboldt-Universität zu Berlin)


(1) UNCTAD. World Investment Report 2001: Promoting Linkages, United Nations, New York and Geneva, 2001.

(2) The table was taken from: Vladimirova I.G. Issledovanie urovnya transnacionalizacii kompaniy.-Menedjment v Rossii I za rubejom. #6,2001. (Raschitano po: World Investment Report 2001: Promoting Linkages, United Nations (UNCTAD), New York and Geneva, 2001.)

(3) Daniels John D., Radebaugh Lee H. Mejdunarodniy bisnes: vneshnyaa sreda I delovie operacii. Moskva, "Delo Ltd", 1994. s 726.

(4) Movsesyan A., Ognicev S. Transnacionalniy kapital I nacionalnie gosudarstva. - Mirovaya ekonomika I mejdunarodnie otnoshenia. # 6, 1999. s.55.

(5) The table was assembled by the author of the article from: Varrena Eduard. Angliyskaya India v 1843 godu. Chast 3. - Moskva, 1845. s. 116, 120, 129, 131, 136,143-147, 269.

(6) Varrena Eduard. Angliyskaya India v 1843 godu. Chast 3. - Moskva, 1845. s.261-267.

(7) Varrena Eduard. Angliyskaya India v 1843 godu. Chast 3. - Moskva, 1845. s.311-312.

(8) Karimov I.A. Uzbekistan: svoy put obnovlenia I progressa. Tashkent, 1992. s.36-37.


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13.2. Issues of Internal and External Migration in Post-Soviet Central Asia

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Muminova Nargis (University of World Economy and Diplomacy, Uzbekistan): Transnational corporations in global movement of capitals, technologies and migration processes. In: TRANS. Internet-Zeitschrift für Kulturwissenschaften. No. 16/2005. WWW: ../../../index.htmtrans/16Nr/13_2/nargis16.htm

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