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Global Market Forces and the Nationalisation of Foreign-Based Export Companies

Published online by Cambridge University Press:  11 November 2008

Robert L. Curry Jr
Robert L. Curry Jr
Affiliation:
Professor of Economics, California State University at Sacramento, and recently Fulbright Professor at the University of Zambia, Lusaka
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Extract

There are ideological, political, and economic incentives for nationalising foreign-based companies which operate in the export sectors of African economies. The basis of this appeal is the expectation that significant positive net benefits will arise from partial or complete acquisition of company assets. The expected gross benefits which serve as the basis for calculation are subject to risk, because national owners often become decision-takers within global markets over which they are constrained from exerting control.

Type
Africana
Information
The Journal of Modern African Studies , Volume 14 , Issue 1 , March 1976 , pp. 137 - 143
Copyright
Copyright © Cambridge University Press 1976

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References

page 137 note 1 See Wallerstein, Immanuel, ‘The Range of Choice: the constraints on the policies of governments of contemporary independent African states’, in Lofchie, Michael F. (ed.), The State of Nations: constraints on development in independent Africa (Berkeley, 1971), pp. 19–33,Google Scholar and his ‘Dependence in an Interdependent World’, in African Studies Review (East Lansing), XVII, 04 1974, pp. 1–26.

page 138 note 1 For a discussion of the issues underlying the acquisitions and changes in revenue collections, see Bostock, Mark and Harvey, Charles, Economic Independence and Zambian Copper (New York and London, 1972);Google Scholar and also Martin, Anthony, Minding Their Own Business: zambia's struggle against western control (London, 1973).Google Scholar

page 138 note 2 Kaunda, Kenneth, ‘Towards Complete Independence’, speech delivered at Matero, II 08 1969; Zambia Information Service, Lusaka, 1969, mimeographed, p. 35.Google Scholar

page 138 note 3 Bank of Zambia, Report for 1973 (Lusaka, 1974), ch. 4;Google Scholar and Report for 1974 (Lusaka, 1975), ch. 4.

page 138 note 4 Ministry of Development and National Planning, Second National Deuelopment Plan (Lusaka, 1971), pp. 91–92.Google Scholar

page 139 note 1 Bank of Zambia, Report for 1973 and 1974 passim, and Ministry of Planning and Finance, Economic Report for 1973 (Lusaka, 1974), chs. 6–8.Google Scholar

page 141 note 1 Pattison, J C., ‘Commodity and Gold Prices’, in Journal of World Trade Law (London), IX, I, 01–02 1975, pp. 112 and 115.Google Scholar

page 141 note 2 Bank of Zambia, Report for 1973, pp. 22–4.

page 141 note 3 For an excellent and detailed study of the underlying market factors, see Banks, F. E., The World Copper Market: an economic analysis (Cambridge, Mass., 1974).Google Scholar

page 141 note 4 Times of Zambia (Lusaka), 3 January 1975, p. 1.

page 142 note 1 In addition, nationalisation coupled with managerial control could lead to other benefits, notably the deterrence of transfer pricing. This has two objectives: first, to minimise the net tax liabilities of multi-national or otherwise integrated companies by limiting or increasing profits attributable to subsidiaries operating in developing countries. When marginal tax rates are higher there, profits are shifted to developed countries where the parent companies operate, until marginal tax rates are equalised. Given instances, such as in Liberia, where profit share rates are 50 per cent, an integrated company has an incentive to shift profits to where marginal rates are lower, as in many cases in O.E.C.D. countries. The second objective is to shift profits to ‘safe’ currency areas where remittances are not hampered by foreign exchange controls, and where control may be centralised over decisions concerning reinvestment and portfolio balances. See, for example, U.N.C.T.A.D., Report on Restrictive Business Practices (Geneva, 1972), TD/122/Supplement 1, pp. 45–6.Google Scholar

page 142 note 2 See U.N.E.C.A. press release, Addis Ababa, 24 January 1975.

page 142 note 3 Hasenpflug, H. H., ‘The Convention of Lomé – towards a new international cooperation?’, in Intereconomics (Hamburg), VI, 1975, p. 187.Google Scholar

page 143 note 1 Ibid. p. 187. See pp. 186–9 for details regarding other aspects of the Convention.