Multinational Corporations

Multinational corporations (MNCs)—also called transnational corporations—have always been objects of interest to IPE scholars and practitioners. During the Cold War, MNCs were often viewed as being linked with their home government by an “invisible handshake.” The home country government created opportunities for these businesses and opened markets abroad (in “host countries”) for them. The businesses, in turn, advanced the economic and political interests of their home country.

With the end of the Cold War, analysis of MNC behavior quickly spread to issues well beyond their role in Cold War geopolitics. The rise of Asia’s newly-industrializing countries and the increasing globalization of production and finance spurred research on the role of MNCs in the allocation of capital and the control of technology. It became apparent that some MNCs undertook business strategies that were not obviously in the interest of their home country. The distinction between home country and host country also grew less clear. All countries are now host countries in the sense that all countries compete for capital, technology, and jobs in the global market.

IPE scholars have increasingly directed their research towards developing an IPE of Global Value Chains (GVCs). GVCs are complex networks that link independent businesses into a coordinated production and distribution process. New information technology allows firms to coordinate their activities to an extent that was previously possible only within a large enterprise, thereby facilitating the expansion of GVCs. Companies like Nike, Apple, and Wal-Mart coordinate vast GVCs; they focus on design, marketing, logistics, and retailing. Much of the actual manufacturing of products has been outsourced to independent firms in countries such as China, Vietnam, and Malaysia. The IPE of global value chains challenges our understanding of both markets and states and represents an advancing frontier of IPE research.

Posted in Geopolitics