mnc effect

8/10/2019 mnc effect

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MERITS& DEMERITSOFMNCS

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INTERNATIONALPOWERSOFMNC

Tax break

A deduction in tax that is given in order to encourage acertain economic activity or a social objective.

Economic Imperialism

The geopolitical practice of using capitalism, businessglobalization, and cultural imperialism to control a

country, in lieu of either direct military control or indirectpolitical control.

Market Withdrawal

The act or threat of removing one's goods or services fromthe consumer market, potentially reducing the supply of

a product, or of jobs.

Direct control

over foreign affiliates/subsidiaries18

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ROLEOFMULTI-NATIONALCORPORATIONSIN

INTERNATIONALSYSTEM

Multinational corporations have grown and developed

on a large scale in 20thcentury.

Today multinational corporations are not only

production centers that supply crucial and commercial

goods to us.

Their integrating economic power evolves to an

influence that can even effect political and economic

relations between nation states.19

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CHARACTERISTICSOFAMULTINATIONAL

CORPORATION

A MNC tends to be an oligopolistic corporation in whichownership, management, production and sales activitiesextend over several national jurisdictions.

It is composed of a head office in one country with acluster of subsidiaries in other countries.

It can use many kinds of instruments to create businessareas.

They frequently do this by Foreign Direct Investment(FDI).

MNCs not only have multinational investments but alsomultinational human resources.

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THE IMPACT OF MULTINATIONAL CORPORATIONS ON

INTERNATIONAL RELATIONS

MNCs have become massive in scale and have

come to exercise a major influence over political,

economic and social developments throughoutthe world.

The un-stoppable rise of multinationals gave them

both an economic and political power to manipulatestate actions.

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IMPACTS

The emerging global order is spearheaded by a few

hundred corporate giants, many of them are bigger

than most sovereign nations.

The new giant firms of the 21st century have

achieved something that no other nation could

manage today. They have reached millions of

people through different kind of global webs like

shopping, culture, workforce and finance.

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IMPACTS

The rise of multinationals has threatened

the absolute power of nation states.

Nowadays it seems that the sovereign

states are feeling naked. Concepts such as

national sovereignty and national economic

strength appear curiously drained ofmeaning.

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IMPACTS

Both domestically and internationally, states

start to share their political and economic

power with institutions like MNCs.

While they were crossing the border they did

not only interact with the host governments but

they are also cooperated with their home

governments.

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GLOBALIZATIONANDMNCS

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When multinationals broadened their businesses,

they became great political and economic tools for

their home governments to interfere in domestic

affairs of their neighbors.

Globalization and interdependence between states

and firms came to a point to affect our social,

political, economic and cultural lives.

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The world had become more like a global village

where people could meet, trade, interact and effect

each other more than ever.

Nation states, even the wealthiest or the most

powerful ones like U.S, cannot stand alone

anymore in front of multinational corporations in

economic and political arenas.

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Governments promote market friendly policies in order

to take the advantage of the new globalized economy

and in order to cope with the multinationals.

American leadership brought globalization and

globalization brought the multinationals to be one of theleading actors not only on the economic platform but

also, eventually on the political platform.

The multinational corporation not only promises themost efficient use of the world resources but as an

institution it poses the greatest challenge to the power of

a nation-state.29

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CHALLENGESBYMNCS

The challenge that MNEs pose against thesovereignty of the nation state have different

degrees.

Economic sovereignty reflects the ability of a

government to choose how to best to manage its

resources for wealth creating activities.

Cultural sovereignty reflects the freedom of a country

to determine its own way of life, ideologies and values

of other societies.

Legal sovereignty defines a countrys authority todevise its own laws and regulations, independent of any

outside interference.

Political sovereignty embraces economic, cultural and

legal sovereignty.30

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DIPLOMACY

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INTERDEPENDENCEANDTRIANGULAR

DIPLOMACY

Multinational firms are becoming more like

statesmen as they seek corporate alliances to

enhance their capacities to compete with others for

world market shares.

These structural changes in international political

economy have altered the nature of the game thus

affecting the actions and responses among firmsand states.

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TRIADSOFRELATIONSHIPS

States are losing their power to pursue independentpolicies and now must master the new game oftriangular bargaining.

The new game is about keeping relations at a levelwhich please everyone at the same time.

States are now in the middle of a Bermuda triangle.

Governments need to manage a series of difficult trade-offs among competing internal and external objectives.

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NEWDIPLOMACY

New diplomacy has three critical ingredients:

Bargaining among states for power and influence.

The competition among firms contesting the world

market and the specific bargaining between states

and firms for the use or creation of wealth-

producing resources.

Finance and knowledge.

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NEWDIPLOMACY

Changes in these structures throughout in the last

century and in this century have also created new

possibilities for obtaining wealth.

States and multinational corporations adjust

themselves to these changes in order to take the

best advantages from the triangular diplomacy of

world affairs.

Not only in the international arena but also in

domestic politics the influence of state-firm

bargaining has proportionally grown.35

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CONCLUSION

From the daily products we use to gigantic power plants,

military aircrafts and petroleum refineries we have seen

the footprints of giant multinational corporations in all

parts of life. Multinationals have become an

undeniable part of our lives.

As the citizens of nation states we have accepted their

existence and are being benefitted from them.

The influence of multinational corporations on

international relations and mainly the effect of American

multinationals on American foreign policy are well

known and accepted issues.39



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THANKYOU

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mnc effect