Book Review: Nuclear Proliferation: Five Roads to Nordic Security
| Author | Ingemar Dörfer |
| Published date | 01 November 1974 |
| Date | 01 November 1974 |
| DOI | http://doi.org/10.1177/001083677400900409 |
| Subject Matter | Book Review |
have on the various goals of society, i.e. on
economic growth. on the distribution of in-
come,
and
on non-economic goals such as auto-
nomy in political
and
cultural matters. Foreign
enterprises striving for profit-maximization
may be more difficult to control than domestic
firms. Allocative signals (e.g. the French sy-
stem of indicative planning) given by the go-
vernment may be overlooked by the foreign
firm, or the way it responds may be different
from the domestic firm as the options avail-
able
are
different.
If
for instance acredit
squeeze is deemed necessary by the govern-
ment, asubsidiary of a multinational firm can
easily evade such a squeeze by obtaining funds
from abroad, or through manipulation with
leads
and
lags in settling its account with the
mother company. Furthermore, the price of
internal deliveries within the multinational
enterprise can be
arranged
so that necessary
capital is
gradually
made
available to the
subsidiary.
Internal
price setting. however, is
most effective in allocating the profit of the
multinational enterprise among its different
subsidiaries so as to maximize overall net
profits (i.e. profits
after
tax.)
In discussing the effect on the functional
distribution of income (i.e, between labour
and
capital) assuming that foreigners' direct in-
vestments
add
to domestic capital accumula-
tion, Bergo seems to
have
missed the point
that
under
full employment labour productivity
will increase
and
so will the wage rate as wor-
kers come to have more capital to work with
(neoclassical schemel.!
This
has most likely
been the case in Norway. In less developed
countries with
abundant
labour supply and
where the authorities therefore are more in-
terested in labour-intensive rather than capi-
tal-intensive modes of production. a
tax-cum-
subsidy scheme should
have
the effect of giving-
asocially desirable factor-combination [i.e,
subsidizing the use of labour
and
taxing the
use of capital).8 On pure theoretical grounds.
Berge's fear of an
unwanted
income distribu-
tion as a result of direct foreign investments
thus seems unwarranted. History, however,
provides us with
abundant
evidence of labour
exploitation by multinational enterprises.
This book is an important contribution to the
discussion
and
understanding of the multina-
tional enterprise. Its comparative
advantage
is
the variety of interesting issues taken up
and
the clear way in which they are presented.
This, however, also leads to its weakness;
one searches in vain for a coherent frame
of reference for the analysis (be it classical,
neoclassical, or marxian). Statements are less
convincing when a solid theoretical founda-
tion is missing.
When,
in addition, the em-
pirical material is fragmented, the book gives
the impression of being acollection of in-
teresting but somewhat speculative viewpoints.
Historically,
Norway
has received direct
Book Rcvirio J17
foreign investments; it has played the role of
host country.
The
oil activity in the
North
Sea, however, is yielding asubstantial inflow
of foreign exchange and
Norway
may within
short time become a net exporter of capital,
thus switch to the role of being a mother coun-
try of direct foreign investments. It is therefore
of importance that social researchers in general
and economists in
particular
in
Norway
pay
attention to the issues posed by the increasing
multinationalization of modern business enter-
prises. Therefore, this book ought to
have
a
big market - at least in its mother country.
NOTES
IStephen H. Hymer.
The
International
Operation and National Firms: A
Study
0/ Di-
rect Investments, M.I.T., 1960.
tCf.
Harry
Johnson,
'The
Efficiency
and
Welfare
Implications of the International Cor-
poration'. in Charles Kindleberger (ed.), The
International Corporation, 1970.
s Cf. R. Aliber, 'A
Theory
of Direct For-
eign Investment', in Charles Kindleberger (ed.),
'The International Corporation. 1970.
• For a detailed discussion, see
John
Wil-
liamson,
'The
Choice of a Pivot for Parities',
Princton Essays in
International
Finance, 1971.
5For such an analysis see G. D. A. Mac-
Dougall,
'The
Benefits
and
Costs of Private
Investments from
Abroad'
in Economic Record,
March 1960.
• Cf. J. Bhagwati,
'The
Generalized
Theory
of Distortions
and
Welfare'
in Bhagwati, Jones.
Mundell,
and
Johnson (eds.), Trade. Balance
0/ Payments and Growth, 197J.
INGEMAR
DORFER
Johan
jergen
Holst (ed.): Five Roads to Nordic
Security, Universitetsforlaget, Oslo-Bergen-
Tromse 1973. (Norwegian Foreign Policy
Studies,
No.9),
240 pp.
John
Newhouse recalls in Cold Dawn how
adistinguished professor
after
attending
a
conference on
SALT
asked himself whether
he had not learned more about
SALT
than
there is to know.
After
a first reading of this
book one is tempted to similar reflections con-
cerning Nordic security.
Yet the comparison is unfair.
True
enough.
we
goet
the defense structure of each of the
Nordic countries down to the last rifle, but
the detail is supplemented by an overview
and
scope that is full of insights. These authors are
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