Stephen C. Smith
Abstract: The impact of multinational corporations (MNCs) on developing countries has largely been contested in international relations theory. Some theories stress the positive benefits of MNCs, by highlighting technology transfer, export market access, and general economic growth, whereas other theories argue that MNCs introduce inappropriate patterns of consumption and foster a relationship of dependence between less-developed countries (LDCs) and MNCs. This article synthesizes these theories by considering the costs and benefits to LDCs and MNCs in order to determine governmental attitudes towards MNCs as well as MNC attitudes towards investing in LDCs. Lesser developed countries have a dilemma when it comes to dealing with MNCs: the more the LDC needs the MNC, the greater “bargaining power” the MNC has, but the less they need multinational firms, the less positive impacts those MNCs have on development. To alleviate this situation, LDCs can engage in competitive negotiations by bidding with multiple corporations to increase their odds for positive development. LDC bargaining power could also be raised if MNCs were faced with fewer or less acceptable alternatives. Factors including greater information, greater willingness to take risks during bargaining, and greater assurances that policy decisions are capable of being enacted are also likely determinants of bargaining power.
Keywords: Bargaining, multinational corporations, less-developed countries, development, relationships, costs, benefits, negotiation
