Stephen J. Kobrin

Testing the bargaining hypothesis in the manufacturing sector in developing countries

The bargaining power model of HC–MNC (host country–multinational corporation) interaction conceives of economic nationalism in terms of rational self-interest and assumes both inherent conflict and convergent objectives. In extractive industries, there is strong evidence that outcomes are a function of relative bargaining power and that as power shifts to developing HCs over time, the bargain obsolesces. A cross-national study of the bargaining model, using data from 563 subsidiaries of U.S. manufacturing firms in forty-nine developing countries, indicates that while the bargaining framework is an accurate model of MNC–host country relationships, manufacturing is not characterized by the inherent, structurally based, and secular obsolescence that is found in the natural resource industries. Shifts in bargaining power to HCs may take place when technology is mature and global integration limited. In industries characterized by changing technologies and the spread of global integration, the bargain will obsolesce very slowly and the relative power of MNCs may even increase over time.

Foreign enterprise and forced divestment in LDCs

The local subsidiary of a multinational corporation is both a national firm incorporated under host country law and a sub-unit of a centrally optimizing global system. This duality, which is inherent in the structure of foreign direct investment, produces potential benefits—such as resource transfers and access to markets—as well as costs—in terms of constraints on national economic control. Host governments utilize a variety of policies to “…increase the likelihood that the subsidiary will respond positively to the national policies of the host country rather than to the global strategy of the corporate family†— including expropriation or forced divestment of ownership.

Development after Industrialization: Poor Countries in an Electronically Integrated Global Economy

The International Monetary Fund (IMF) defines globalization as broader and deeper integration, ... the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.

Safe harbours are hard to find: the trans-Atlantic data privacy dispute, territorial jurisdiction and global governance

The trans-Atlantic dispute over application of the European Unions Data Directive (1995) is discussed as a case study of an emerging geographic incongruity between the reach and domain of the territorially-defined Westphalian state and the deep and dense network of economic relations. The article reviews significant EU-US differences about the meaning of privacy and the means to protect it, the history of attempts to apply its provisions to information transferred to the US, and the less than satisfactory attempt at resolution – the Safe Harbor agreement. It then argues that attempting to apply the Directive to transactions on the Internet raises fundamental questions about the meaning of borders, territorial sovereignty and political space and explores the implications for territorial jurisdiction and global governance at some length.

Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment

Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment. By Nathan M. Jensen. Princeton: Princeton University Press, 2006. 224p.

AN EMPIRICAL ANALYSIS OF THE DETERMINANTS OF GLOBAL INTEGRATION

35.00. The dramatic increase in flows of foreign direct investment (FDI) during the last two decades of the twentieth century has been accompanied by an extensive literature dealing with the impact of multinational corporations (MNCs) on issues such as economic growth, poverty and inequality, the environment, and cultural diversity. As many of the concerns about these impacts, positive as well as negative, revolve around the question of markedly increased competition among states for MNCs, it is surprising how little attention has been paid to the political and economic factors that attract FDI.