MNC's are here to stay

The Inayatullah article and the article by Frieden and Rogowski were very interesting reads when considered in relation to each other. On page 32 Frieden and Rogowski seemed to emphasize the “costs” of having a closed economy and seemed to overall paint economic liberalization in a positive light throughout their article. On the other hand, Inayatullah points out that economic liberalization may not be beneficial for all countries and furthermore that some countries had a head start and greater advantages in the current system.

            Interestingly enough, I think both points illustrate why MNC’s play such a large role in the international community. There are clearly costs to keeping a closed economy and there are clearly countries that have an advantage over other countries in terms of their level of development. For this reason, it is often in the interests of states to have MNC’s within their countries. In poorer countries this can even help fill welfare gaps that the country cannot manage on its own.

The question then is what happens the interests of MNC’s and states come into conflict. Ideally the MNC’s should be subject to the laws of the state but this can become ambiguous when MNC’s can move any part of their production chain to any country in the world and even influence policy decision within state governments. Additionally, issues of authority vs. capacity come into play here. A less developed and more dependent country will be less able to enforce any law on an MNC compared to some wealthier nations. In the last live session, some students suggested that as consumers, we should be aware of the actions of major corporations and boycott them if need be. Being subject to the market, this might have more effect on MNCs than the law they are supposed to be subject to. Although, I am skeptical of how effective the general population can be in significantly influencing the behavior of corporations overall.

Another possibility might lay within countries or states acting to blacklist a corporation until it falls in line with internationally agreed upon standards regarding how a corporation should behave. The issue here however is that of the prisoner dilemma. Each country would have to honor its agreement to blacklist a problematic corporation and not cheat in favor of gaining economically from the situation. Such a strategy of cheating would be very difficult for a poorer country with a struggling economy to pass up. Thus again, even with this solution there seems to be a need for enforcement that would be problematic in regards to issues of sovereignty and capacity.