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Question

Difficulty: HardDevelopment of Industrial Capitalism and Transnational Businesses

"The government of Costa Rica grants to the concessionaire the exclusive right to construct, maintain, and exploit a railway from the Atlantic coast to the capital... The government also grants to the concessionaire eight hundred thousand acres of public lands, which may be selected in any part of the republic... These lands shall be exempt from all national or municipal taxes for a period of twenty years, and the concessionaire shall have the right to import free of all customs duties all machinery, tools, and materials necessary for the construction and operation of the railway."
— Contract between the Government of Costa Rica and Minor C. Keith (founder of the United Fruit Company), 1884

The concessions described in the passage best illustrate which of the following global economic trends in the late nineteenth century?

  1. A
    The implementation of direct colonial rule and administrative annexation of Central American states by industrial powers
  2. B
    The continuation of mercantilist regulations designed to limit the accumulation of private capital in favor of imperial treasuries
  3. The growth of transnational corporations that secured political and economic influence in foreign states to facilitate resource extraction and tradeAnswer
  4. D
    The rapid decline of steam-powered transportation networks due to the emergence of electrical power grids

Answer

The growth of transnational corporations that secured political and economic influence in foreign states to facilitate resource extraction and trade
The correct answer is correct because the contract between the Costa Rican government and Minor C. Keith (who later co-founded the United Fruit Company) represents how transnational businesses operated. These corporations secured significant economic concessions—such as vast tracts of land and tax exemptions—in exchange for building infrastructure, allowing them to exert immense influence over the economies and politics of sovereign states.

Step-by-Step Solution

1
Analyze the stimulus document for key actors and economic actions.
The 1884 contract shows a private concessionaire obtaining exclusive railroad rights, extensive tax-free land grants, and import duty exemptions from the Costa Rican government.
This establishes that a private, foreign-backed business entity is gaining substantial economic privileges and control over resources within a sovereign state.
2
Contextualize this relationship within late nineteenth-century global economics.
This reflects the rise of transnational businesses (like the United Fruit Company, which grew out of this specific railway concession) that expanded their operations globally by securing lucrative concessions from states seeking infrastructure development.
Connecting the specific primary source details to the broader historical developments of Unit 5 confirms the central concept of the question.
3
Evaluate the choices and eliminate historical inaccuracies.
The option describing transnational corporations matches the historical context. The other options mistakenly assume direct colonization, early modern mercantilist frameworks, or the decline of steam technology during the height of the railway age.
This guarantees that the chosen answer is historically accurate and directly addresses the prompt.

Key Concept

The global expansion of transnational businesses in the late nineteenth century, which leveraged capital investments to acquire political and economic leverage in developing nations.
Estimated Time:2m 0s
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Topics

Development of Industrial Capitalism and Transnational Businesses

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