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Government—MNC Relations

In: Bargaining with Multinationals

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  • Henry Bernard Loewendahl

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.

Suggested Citation

  • Henry Bernard Loewendahl, 2001. "Government—MNC Relations," Palgrave Macmillan Books, in: Bargaining with Multinationals, chapter 5, pages 93-110, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-59571-2_5
    DOI: 10.1057/9780230595712_5
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