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Transnational Corporations

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Darby Hamilton

on 28 November 2013

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Transcript of Transnational Corporations

Commercial free zones, free trade zones, and free zones (FZs)
Export processing zones (EPZs)
Free enterprises (FEs) or single factory/single unit free zones

special economic incentives

Transnational Corporations & Special Economic Zones

A case study in the form and function of
in Andhra Pradesh, India
Transnational Corporation (TNC)?
Often confused with
"multinational corporations" (MNCs)
of the
corporate entity [parent company & affiliates]
the difference:
TNCs have no "home state"
transnational corporation (TNC)
is a
exists juridically and/or conducts operations
within the
territorial boundaries
two or more independent states
what is a
Special Economic Zone (SEZ)?
Policy Intent/ raison d’être

-Attract FDI
-Alleviate unemployment
-Support a wider economic reform strategy
-Experimenting with new policies

Structural Features

-Physical Infrastructure

what is a
territorially-bound industrial enclave
100 largest "economies"
in the world (2000 GDP/sales),
51 are corporations
while only
49 are states
(Andersen & Cavanagh, 2000)
what are
Transnational Corporations
& Special Economic Zones?
TNCs can be classified according to a various characteristics:
single oversight management body
Industry type
for example -
 that offers
automotive, petroleum, electronics, food, etc.
private and public firms

Primary sector
“ In 1986, the International Labour Organisation’s (ILO’s) database reported 176 zones in 47 countries; by 2006, it reported 3,500 zones in 130 countries.” (Farole)

Integration structure
horizontal vertical diversified
“On the one hand, SEZs [are seen] as welfare-reducing enclaves that constrict countrywide liberalization; on the other, as catalytic exclaves that announce and prepare for liberalization.”
( Farole)
Goods Services
or or
governed by a
situated within its
established physical borders
is a
special economic zone (SEZ)
TNCs serve as driving force of (economic) globalization
Fenced-in territory of several hectares offering developed industrial land for rent/lease, situated outside the country’s custom territory

through investment, trade, research and development, etc.
-Operate under the bonded warehouse format
-Activities limited to trade-related processes and light processing operations

A variation on the FZ/EPZ in which individual enterprises are provided with FZ/EPZ status and allowed to locate anywhere on the national territory or in a designated part of the territory (The Maquilladora in Mexico)
They encompass entire economic regions, the populations that live and work in these regions, and all the economic activities that take place there

now that we know what they are...
What do they look like in practice?
Our case study:
Polepally SEZ
Andhra Pradesh, India
the context
100% Export-Oriented Units (EOUs) - "single enterprise EPZs"
Software Technology Parks (STPs) - "service-oriented zones"
Third stage: SEZ Act of 2005 - institutionalization of SEZs
First stage: Industrial Policy Resolution (IPR 1948)
First Indian EPZ - Kandla
Second stage: EPZ reform - implementation of Chinese-style SEZs
the case of
subsidized electricity
intended to:
increase foreign exchange earnings
promote exports
generate employment
attract foreign direct investment
receive (as incentives):
100% tax exemption - first 5 years
permanent exemption from:
minimum alternate tax
central sales tax
external commercial borrowings - USD 500 million per unit
duty-free import & domestic procurement of goods
service tax
unrestricted access to groundwater
thus far:
173 functional
Land Acquisition (Amendment) Act
The Land Acquisition (Amendment) Act
mass eviction of citizens (forced acquisition of land)
dissolution of domestic firms (crowding out)
loss of tax revenue
Broad impacts
degradation of worker’s rights
loss of arable land (overexploitation of natural resources)
Broad impacts
increased FDI
increased employment (aggregate)
relocation of firms (non-SEZ to SEZ)
581 approved
393 built
3,057 total
2,242 affiliates
815 parents
The Land Acquisition Act
Polepally SEZ
increased exports
Land Acquisition
for the SEZ:
began in 2001 - peaked in 2005
1150 acres seized in total
three villages affected: Polepally
Gundla-gadda Thanda
693 taken from 339 families in Polepally
179 lost acquired land
160 lost "assigned land"
background & setup
Legal framework
of the SEZ
TNC integration
land - the Land Acquisition Act & Amendments
governance - SEZ Act of 2005
in the SEZ
Polepally SEZ
Reliance Group (India) - petrochemical
Aurobindo Ltd. (India) - pharmaceutical
Mylan Inc. (U.S.) - pharmaceutical
Optimus Generics Ltd. (India) - pharmaceutical
breakdown of collective life
pollution of water sources
Hetero Ltd. (India) - pharmaceutical
structure - AP Industrial Infrastructure Corporation
loss of methods of subsistence:
cattle sheds
local unemployment
degradation of land
gendered exploitation & violence
heath issues
42 deaths associated with construction
local & regional:
widespread protests
organized suppression
of malcontents
TNCs in SEZ pressure
local government
international media attention;
further protests
theoretical perspectives:
Neoliberal (mainstream)
Political economy
Neo-Marxist (heterodox)
land reform as enclosure - primitive accumulation
locals dispossessed of land - reserve army of the unemployed
SEZ as outcome of politics of interest groups - rent-seeking
SEZ's should create economic growth, increase FDI, and reduce unemployment
Aggarwal, Aradhna. Social and Economic Impact of Sezs in India. New Delhi: Oxford University Press, 2012. Print.

Farole, Thomas. Special Economic Zones in Africa: Comparing Performance and Learning from Global Experiences. Washington, DC: World Bank, 2011. Print.

Rawat, Vidya; Bhushan, Mamidi; Surepally, Sujatha. The impact of special economic zones in India: A case study of polepally SEZ. International Land Coalition, January 2011.
Which theoretical perspective do you find best explains the situation in Polepally? In SEZ's in general?
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