Government—MNC Relations

Henry Bernard Loewendahl

Chapter 5 in Bargaining with Multinationals, 2001, pp 93-110 from Palgrave Macmillan

Abstract: Abstract In this chapter the structural changes influencing the relationship between MNCs and governments are examined and it is argued that bargaining between host country governments and multinational companies is becoming more important as interdependence intensifies. Structural changes are leading to inter-state competition for the attraction of inward investment, particularly as companies are increasing both their locational flexibility and control over core technologies. Interdependence is therefore asymmetrical, with MNCs having increased structural power over governments. The key implication is that while many commentators argue that government industrial policy is shifting from protecting ‘national’ champions to upgrading the location-specific advantages of the economy for all investors, the structural power of multinationals has led to the continued subsidisation of their activities. Hence, companies that have global mobility and control over core technologies, such as in the semiconductor industry, are benefiting from large government R&D subsidies and, most significant for this study, have been able to bargain for investment incentives when making a new investment.

Keywords: Foreign Direct Investment; Host Country; Bargaining Power; Industrial Policy; Structural Power (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-59571-2_5

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DOI: 10.1057/9780230595712_5

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