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Overview:
Typically, MNCs go overseas because they possess some special advantage they
want to exploit fully and because there are benefits to locating their activities abroad.
These benefits may range from avoiding barriers to imports to employing cheaper,
foreign labor.
While most political economists will agree with the above summary, there is far
more debate as to the kinds of effects MNCs have. Economic liberals see them as
forces for positive change, spreading good things, like technology and efficiency
around the world. Economic nationalists see them as threatening the sovereignty of
nation-states. Marxists and structuralists worry that they are helping to create a world
marked by inequality and dependency.
This chapter does not take sides. Rather, it presents each side's case so that the
reader can reach his or her own conclusion about MNCs.
Learning Objectives:
What is the geographical pattern of foreign direct investment and what factors
account for this pattern?
Which are the most important home and host countries for MNCs?
What specific reasons and theories account for the fact of foreign direct
investment?
What are the positive and negative views of MNC effects on host countries?
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What are the positive and negative views about MNC effects on home countries?
What is the role of the state in home and host countries with respect to MNCs?
Chapter Outline:
1. Introduction
a) MNCs are now an integral part of the IPE.
b) MNCs arouse fears and suspicions, especially in home countries but also in
host countries.
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5. The Impact of Multinational Corporations
a) Since MNCs are a fact of life, the existence of MNCs is not in question.
b) It is rather the behavior of MNCs and their impacts on home and host
countries that should be evaluated.
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12. Box: When Countries have the Upper Hand: Boeing and China
a) In this case China seems to have the upper hand over Boeing. Boeing wants
to secure a majority of the Chinese market in order to maintain in leadership
in aerospace.
b) China realizes this and can playoff Boeing against Airbus.
c) China has manipulated its trading relationship with Boeing and other U.S.
MNCs for political purpose
13. Conclusion
a) Following strictly economic logic, MNCs are likely to continue to grow at a
rapid pace in the near future.
b) For shelter and respite from economic battles, MNCs can be expected to
form alliances and partnerships across borders.
c) This could eventually weaken state authority.
d) Counterforces promise to generate demands for measures by the state to
control the effects of MNCs.
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