Some Issues of Political Economics of Multinational Corporations

The existence of multinational corporations is not self-evident. These corporations have costs linked with business in foreign countries compared to their domestic competitors. Therefore, in the long term, they must have particular advantages over domestic firms. These advantages are external to the market system, and in order to make them exist, a governmental activity is necessary. The government, through its intervention on the market, increases transaction costs of using the market mechanism, and through this, it also increases the influence of multinational corporations. Today, the issue is the influence of active external macroeconomic policy and the policy towards investors which uses incentives for them. The bargaining between governments and MNCs has conformed more to the market rules. However, at the same time, it has also become more institutionalised and still remains in the mercantilistic tradition.