Transnational companies

Definiton: Those companies the activity of which pass the borders of their country, thus they do not produce their products in only one certain country, but in the whole world economy. They establish subsidiaries or contain companies in different countries. Sometimes they are called multinational companies („multi”), but a company is actually called „multi” if its owners are from different countries.

Summary: - passes the borders of its country

- produces in the whole world economy

- sells its products at the world market

- establishes subsidiaries

- is called „multi” sometimes

Aim: They locate certain activities to certain countries or regions in order to decrease the budget of production to the minimum and increase the profit to the maximum.

Reason for their establishment: the world economy became worldwide in the 1970’s oil crisis of the 70’s a companies had to recognize the demand of the consumers a they have to take the appropriate product to the market fast competition have to be able to produce the goods on the lowest price they locate the factories to different places where the certain part of production is the cheapest

Consumers’ demand: goods produced in relatively short series, and those change fast a need of fast reaction a flexible (rugalmas) production

Large-scale development of communication a condition of the worldwide location of production

a possibility for the transport of capital in a short time

General Characterization:

1.) After the World War II: - companies had subsidiaries abroad

parent company subsidiary

decision production

research & technology

2.) Nowadays: transnational companies + their subsidiaries = integrated network of

production

parent company subsidiary

headquarters of the company production

decisions are made here

control of planning

control of research and development

control of market research

Operation system of the TNCs

market research & marketing	close to the consumers’ market
research & development	close to the large cities containing universities
production	all over the world
production of basic materials	in developing countries, close to the raw- material and energy („kéményes ipar”)
production of components (részegységek)	anywhere where there is cheap, but skilled labour force and tax allowance (adókedvezmény)
production of the end product (végtermék) + assembly (összeszerelés) + marketing (értékesítés)	near the consumers’ market

The basic condition for this system is the modern infrastructure. The activity of the TNCs is followed by the flow of functioning capital a strengthens the role of financial sector

Competition between TNCs a they spend much on Research + Development

a they always change their park/site (telephely) according to

the beneficial possibilities of world economy

a dispersion (szétszórtság) is characteristic

creates possibility for work

As the role of national economies role of TNCs grow

decreases

Transport of Hungary

A good transport system and a fast and cheap transportation help the economical production.

 Hungary is the meeting area of the west- east end the north-south transport system of the Carpathian-basin. So the transit traffic (átmenő forgalom) is considerable.

The Hungarian transport system needs development. So they build new-motorways 
-railways
-airports
-ports  
-navigable canals (hajózható csatorna)

Transit (áruszállítás): 
I. truck (tehergépkocsi) transport
–it need not transhipment (átrakodás)
-relatively cheap
II. railway
- it is appropriate for transport of mass goods (tömegtermékek)

People transport (személyszállítás): 
I. coach-between cities and villages bus-between homes and workplaces
II. air transport-for long distances

Hungarian transport is radial built (sugaras szerkezetű) and it is extremely (túlzottan) Budapest centred.

Density of the transport system is medium compared to (viszonyítani v-mihez) the European average.

Settlements without railway are connected to the transport by coaches.

Railway:

-The name of the Hungarian railway is Hungarian National Railway: MÁV

-There are large differences between the circulation of the certain lines.->some of them are

-It has good joints to the European railway system. given up for today

-It can develop, if it can take place in a larger degree in the combined carriage.

-Railway is faster and cheaper than the truck transport. (kombinált fuvarozás)

-The busiest railway stations: 
-Budapest
-Hatvan
-Miskolc
-Debrecen
-Székesfehérvár
-Győr

Road-system:

-Roads are not strong and wide enough for the extended traffic.

-Roads, which are internationally significant, are very crowded (zsúfolt).

-Highways and main roads are side by side the railways.->There are no opportunities to make new economical relations inside the country.

Highways: 
-M0:Bp. beltway
-M1:Bp.-Tatabánya-Győr-Hegyeshalom
-M2:Bp.-Vác
-M3:Bp.-Miskolc, Debrecen
-M5:Bp.-Kecskemét-Szeged
-M6:Bp.-Dunaújváros
-M7:Bp.-Székesfehérvár-Zamárdi-Rédics

Main roads: 
-Mr2:Bp.-Vác-Hont
-Mr3: Bp.-Miskolc-Tornyosnémeti
-Mr.4:Bp.-Debrecen-Nyíregyháza-Záhony
-Mr.6:Bp.-Pécs
-Mr.8:Székesfehérvár-Szentgotthárd

Navigation (vízi közlekedés):

-Navigation  is only significant in external trade.-Rhine-Main-Danube canal

-The cheapest kind of transport, but it is slow.

-Significant traffic is only on the Danube.

-It has natural disadvantages:
 -autumnal and wintry low tide (vízállás)
-frost
-ice drift (jégzajlás)

Reasons, why lost the watery transport its significance:
-Ships on the Danube are antiquated and there is no money for the development.
-The Danube and the Tisza flow side by side and there is no connection between them.

Air transport:

-This kind of transport develops the fastest.

-The fastest kind of transport, but it is expensive.

-It is economical only in the international transport.

-The name of the Hungarian airline is MALÉV.

-The busiest international airport is Budapest-Ferihegy.

-Other airports are for example in Debrecen and in Sármellék.

The liquid and gaseous goods, such as mineral oil and natural gas, are transported by pipelines (csővezetékek).

Underground waters in Hungary

The greatest storages of layer waters (rétegvizek) are the alluvial cones that formed in the quaternary period. If the water of the rivers infiltrates through the sand and marble layers, it is called water filtered at the bank (parti szűrésű víz). For instance, the water demand of the inhabitants of Budapest is satisfied from this water stock (vízkészlet).

A group of layer waters: artesian waters (artézi vizek). These waters come to the surface because of the high pressure.

By the 19-20th century the demands have been satisfied from the waters of the wells, these are called ground waters (talajvíz, remélem ez a jó szó rá). This was a serious source of infection, no doubt. 5-10% of the extracted water is still ground water.

If the water table (the surface of the ground water, talajvíztükör) elevates above the ground, then it is called inland water (belvíz).

Another group of layer waters: thermal waters (hévíz). If the temperature reaches 30°c.

At karstic areas where water infiltrates through the surface, the space waters (résvizek) appear in the form of cold or warm karstic springs. They have had an important role in the drinking water supply of Miskolc and Pécs for a long time. However, they are still present at the spas of Hévíz, Eger and Buda.

Unequal economic development within the European Union

Within the European Union, The so-called Blue Banana is the most developed district. Its extension: Southern part of England – Benelux states – Ruhr Region – the valley of River Rhine – Switzerland – Northern Italy.

Germany

-          The most developed economy and industry

-          44% of the workers are employed in the industry

-          Outstanding: machine industry, factory equipment, vehicles and electronic goods

-          Thyssen: the biggest metallurgical corporation

-          Car-making: Volkswagen, Mercedes

-          Chemical industry: Bayer, BASF

-          1990: unified Germany, the equalization between the two parts took up several years

France

-          Varied natural resources & well-balanced economic structure

-          Industry: in the surroundings of Paris and in the North

-          Other development centres: Marseille, Toulouse, Bordeaux

Great Britain

-          After the loss of her colonies England has fallen behind her European competitors

After this:

-          Rapid development in Southern England

-          The old industrial districts of Central England suffer from the crises of coal mining, metallurgy and textile industry even today

-          Less developed: The North (Scotland), oil production and microelectronics

The Benelux countries and Denmark

-          Overdeveloped metropolises: Copenhagen (Denmark), Amsterdam, Rotterdam (the Netherlands) and Brussels (Belgium)

-          In Belgium, the Fertile Flemish part by the seacoast was outstanding for decades

Ireland

-          The least-developed country of Western Europe

-          In recent decades, tax allowances were granted for foreigners in order to facilitate industrialization

The less developed peripheral part of the EC is the Mediterranean area.

-          The Industry of Spain, Portugal and Greece expanded rapidly in the last few decades

-          Favourable natural conditions: they are the main suppliers of early vegetables, citruses, wine and edible oils on the European market

-          TOURISM. Spain and Italy are the 2 most important countries

Italy

-          The Northern part is more developed than the Southern one, it has historical roots

-          In the North: Turin-Milan-Genoa triangle

-          Po Valley: very fertile plain

The newly-joined countries mainly belong to the pheripheral countries of the European Union, except for some developed districts. These countries cannot catch up with the developed central parts and not just because of their physical position but their size and previous development are also not the class of the field.

World Trade in the 20th century

1st half of the 20th cent.:
- free competition a countries got into overproduction crisis a a

lot of companies went bankrupt a they were bought a companies concentrated in a few hands a monopole capitalism

- on the colonies labour force was cheaper a they took their capital there a it is called colonial capital export.

- Germany, Japan, and the USA connected into the international share of work a the autarchy (egyeduralom) of Great Britain ceased a multipoled (többpólusú) world economy formed

- I World War: USA and Japan strengthened The economical crisis of the world (1929-33) tumbled (szétzilál) world trade.

After the II World War:
- 3 types of countries formed: socialist, capitalist and developing

Countries
- there were national economies those were separated by tariff borders and they limited the free flow of goods and capital a world market was a totality of national economies, world trade passed off (lezajlik) between the countries
- capital export increased

Nowadays: - world trade passes off mainly between the countries of the centres of world economy, especially between the 3 centre poles of growing (Triad)

Triad:
- the main flow of capital, technology and goods happens between its countries
- Its countries possess the 80% of the world’s all operating capital

Japan:
- 7% of goods of the world market comes from Japan
- one of the most important functioning capital exporters (exceeds its func. capital. import)
- most important goods that Japan imports is raw-material
- has the most significant commercial activity and commercial surplus related to the other countries of the Triad

European Union:
- The EU supports commerce in her own territories a creams off The goods brought from outside the borders- In the EU there are so-called world cities (and almost everywhere int he world) which have certain tasks (e.g. Frankfurt and Zürich are financial centres). World cities are the centres of worldwide flow of information and capital.
- the commercial activity of the EU produces only a little surplus
- participates by 1/3 of the functioning capital import and export of the world

The USA:
- main stronghold of its economy are commerce and financial activities
- its main partner in functioning capital export is the EU
- it accumulates the most commercial deficit related to all countries of the Triad
- its functioning capital import and export is the largest in the world

The Little Tigers, which are the newly industrialized countries of East-Asia, and their second generation are also important participants of world trade.

- first generation: S-Korea, Taiwan, Singapore, Hongkong
- second generation: Indonesia, Malaysia, The Philippines, Thailand

Singapore is the most important commercial junction (csomópont) of the Little Tigers.

International capital flow:

1.) End of the 18th.cent. – I World War: colonial capital export

Capital export of th developed countries was directed towards the colonies rich in raw-materials and towards East- Central-Europe

2.) Between the two world wars: capital flow fluctuated

3.) After the II World War: capital movement between developed countries was characteristic (mainly between the EEC and the USA)

- main aim of the capital flow was the substitution of foreign trade (külkereskedelem).

4.) 1970-85: 
-Japan joined the investors but took part only in functioning capital export
- USA and EEC took part in both capital import and export

Capital export from developed to developing countries appeared again
Aim: located the old technologies to the developing, but industrializing
Countries a it is called production outplacing export (termeléskihelyező export)

4.) Nowadays:
- main functioning capital exporters are: Great B., Germany, USA, Japan (countries of the economical poles)
- 80% of all funct. Cap. Flow happens among them
- new phenomena: Japan exports its functioning capital into developed countries a J. can appear more easily on their market
- funct. capital flow still substitutes the foreign trade
- funct. cap. Flowing towards the countries of the peripheria (East-Central Europe, China, Vietnam)
serves the interests of the transnational companies
- colonial investments are outworn
- almost half of the funct. cap.flows into services