The Illusion of State Power: Transnational Corporations and the Neutralization of Host-Country Legislation

Ten years ago there was widespread agreement that transnational corporations constrained the exercise of state power in the Third World. During the 1970s, however, there have been increasing challenges to this idea. Neo-conservatives, neo-mercantilists, bargaining writers, and statists have all been struck by the growth of economic nationalism and the resurgence of the state. Thus, a new orthodoxy has emerged which suggests that the transnational corporation rather than national sovereignty is increasingly 'at bay'.The research described in this article examined the responses of transnational corporations to Nigeria's increasingly stringent indigenization policies during the 1970s. Transnational corporations have developed a range of defensive strategies which effectively neutralize the Nigerian policy. Thus it is clear first that an increase in the frequency of state actions is by no means equivalent to an increase in the effectiveness of state actions. Second, the sharing of equity is a long way from the sharing of control in joint ventures with transnational corporations. Third, any assessment of the balance of bargaining power between states and transnational corporations must take account of the dynamics of change within each of the major protagonists.Changes have taken place in the relationship between states and transnational corporations during the 1970s. However, most observers have ignored the defensive responses and capabilities of transnational corporations. The balance of bargaining power between host- countries and transnational corporations has not shifted either as far or as quickly as most of the advocates of the 'resurgence of the state' literature maintain.