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Multinational Corporations and Politics in Developing Countries

Published online by Cambridge University Press:  13 June 2011

H. Jeffrey Leonard
H. Jeffrey Leonard
Affiliation:
Princeton University
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Abstract

Recently, much attention has been focused on the influence that multinational corporations (MNCs) have on the politics of developing countries. Even setting aside past legacies of sinister corporate conduct, most students of politics agree that MNCs are potentially important actors—for better or for worse—in a country's political development because they can influence the rate, direction, and beneficiaries of change. Most case studies begin with the assumption that the political impact resulting from the presence of MNCs in developing countries is primarily a function of the international economic system. However, all but one of the books under review focus on the domestic political system in individual host countries as the independent variable rather than on the international economic system. Taken together, these studies make a strong case that the analysis of the MNC and its impact on politics in developing countries must prace heavy emphasis on the particular political circumstances prevailing in each country. The wants, needs, and motivations of key domestic political actors—many of whom do not behave in the manner predicted by either Liberal or Marxist world models—appear to be of fundamental importance in determining how MNCs affect a developing country's politics, and whether that country can counter any potentially adverse political impacts that may accompany MNCs.

Type
Review Articles
Information
World Politics , Volume 32 , Issue 3 , April 1980 , pp. 454 - 483
Copyright
Copyright © Trustees of Princeton University 1980

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References

1 Some theoretical attempts have been made to view the corporation as an actor in domestic political processes, mostly with regard to the American experience. See, for instance, Epstein, Edwin M., The Corporation in American Politics (Englewood Cliffs, N.J.: Prentice-Hall, 1969)Google Scholar; Lindblom, Charles E., Politics and Markets (New York: Basic Books, 1977)Google Scholar; and McConnell, Grant, Private Power and American Democracy (New York: Vintage Books, 1966)Google Scholar. On the international level, the efforts to put the multinational enterprise in a political context have been significantly advanced in recent years by, among others, Cohen, Benjamin, The Question 0} Imperialism: The Political Economy of Dominance and Dependence (New York: Basic Books, 1973)CrossRefGoogle Scholar; Gilpin, Robert, US. Power and the Multinational Corporation (New York: Basic Books, 1975)CrossRefGoogle Scholar; Huntington, Samuel P., “Transnational Organizations in World Politics,” World Politics, xxv (April 1973), 333–68Google Scholar; Keohane, Robert O. and Nye, Joseph Jr., eds., Transnational Relations and World Politics (Cambridge, Mass.: Harvard University Press, 1972)CrossRefGoogle Scholar; Nye, Joseph Jr. “Multinational Corporations and World Order,” in Ball, George W., ed., Global Companies (Englewood Cliffs, N.J.: Prentice-Hall, 1975)Google Scholar.

2 For whatever reasons, the seminal works on politics in developing countries during the 1960s made no reference to the influences of foreign corporations. Note the absence of multinational corporations in, among others, Almond, Gabriel A. and Coleman, James S., eds., The Politics of the Developing Areas (Princeton: Princeton University Press, 1960)Google Scholar; Apter, David E., The Politics of Modernization (Chicago: University of Chicago Press, 1965)Google Scholar; Huntington, Samuel P., Political Order in Changing Societies (New Haven: Yale University Press, 1968)Google Scholar; and Pye, Lucien W., Aspects of Political Development (Boston: Little, Brown, 1966)Google Scholar.

3 See, for instance, Drucker, Peter F., “Multinationals and Developing Countries: Myths and Realities,” Foreign Affairs, Vol. 53 (October 1974), 121–34CrossRefGoogle Scholar; or Krause, Lawrence B., “The International Economic System and the Multinational Corporation,” in Mansfield, Edwin, ed., Economics: Readings, Issues, and Cases (2d ed.; New York: Norton, 1977), 383–90Google Scholar.

4 See the chapters on multinational corporations in Blake, David H. and Walters, Robert S., The Politics of Global Economic Relations (Englewood Cliffs, N.J.: Prentice-Hall, 1976)Google Scholar; also Spero, Joan Edelman, The Politics of International Economic Relations (New York: St. Martin's Press, 1977)Google Scholar.

5 For a discussion of some of the added difficulties of regulating multinationals in the manufacturing sector, see Vernon, Raymond, Storm Over the Multinationals: The Real Issues (Cambridge, Mass.: Harvard University Press, 1977), 71–72Google Scholar, 394–96; Bergsten, C. Fred, Moran, Theodore H., and Horst, Thomas, American Multinationals and American Interests (Washington, D.C.: The Brookings Institution, 1978), 130–40, 377–80Google Scholar.

6 Although the entire book is listed on the masthead, only Apter's article is relevant to the subject of this review. Therefore, the other articles in Apter and Goodman are not dealt with in this essay.

7 For the “classical” view on dependency and underdevelopment see, among many others, Baran, Paul A., The Political Economy of Growth (New York: Monthly Review Press, 1957)Google Scholar, and Andre Gunder Frank, Latin America: Underdevelopment or Revolution (Monthly Review Press, 1969).

8 Three examples of the still emerging “dependent development school” are Fernando Enrique Cardoso, “Associated Dependent Development: Theoretical and Practical Implications,” in Stepan, Alfred, ed., Authoritarian Brazil: Origins, Policies, Future (New Haven: Yale University Press, 1973)Google Scholar; Evans, Peter, Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil (Princeton: Princeton University Press, 1979)Google Scholar; and Leys, Colin, Underdevelopment in Kenya: The Political Economy of Neo-Colonialism (Berkeley: University of California Press, 1975)Google Scholar.

9 Vernon, See, Sovereignty at Bay (New York: Basic Books, 1971)Google Scholar; Behrman, , National Interests and the Multinational Enterprise (Englewood Cliffs, N.J.: Prentice-Hall, 1970)Google Scholar.

10 “National Elites, Ideologies and Cultures,” in Vernon (fn. 9). See also Vernon, “Multinational Business and National Economic Goals,” in Keohane and Nye (fn. 1), 343–55; and Vernon, “The Power of Multinational Enterprises in Developing Countries,” in Madden, Carl H., ed., The Case for the Multinational Corporation (New York: Praeger, 1977)Google Scholar.

11 Vernon, in Keohane and Nye (fn. 1), 354.

12 Vernon (fn. 9), 193–201.

13 In addition to Apter, these include Huntington (fn. 1), and Nye (fn. 1).

14 Evans, “National Autonomy and Economic Development,” in Keohane and Nye (fn. 1), 339.

15 Vilmar Foria, “Dependencia e ideologia empresarial,” paper presented at the 9th Latin American Congress of Sociology (Mexico City, November 1969), cited by Evans, ibid.

16 A more realistic and complicated view of South American corporatism, and of the role that multinational corporations have played in its development, is found in the writings of Guillermo A. O'Donnell. For a discussion of O'Donnell's general views, see Collier, David, “Industrial Modernization and Political Change: A Latin American Perspective,” World Politics, xxx (July 1978), 593–614CrossRefGoogle Scholar.

17 Vernon (fn. 9), 249.

18 Sklar notes that the willingness of the mining companies to assist Zambian national leaders in their drive for economic disengagement from white-ruled Southern Africa does not affect the companies' conduct in other national jurisdictions. Thus, he finds that the corporations make no concession to Zambia's long-term ideological goal of liberation for all of Southern Africa. The mining companies participate substantially in the economies of both South Africa and Zambia, abiding by the morality and rules within each country, but not allowing either country to affect their dealings with the other (pp. 176–78).

19 Essentially, such frameworks view foreign investors and host governments as trying to maximize their benefits by making threats and offering benefits. The host country has the mineral resources, the labor force, control over access, as well as the ability to manipulate taxes, economic incentives, and regulatory requirements. The foreign investor has the skills, technology, international marketing connections, and large doses of capital to help the country develop its resources. For an excellent illustration of how this general approach has been applied, see Mikesell, Raymond F. and others, Foreign Investment in the Petroleum and Mineral Industries (Baltimore: The Johns Hopkins Press, 1971)Google Scholar.

20 Clapham, Michael, Multinational Corporations and Nation States (London: Athe-lone Press, 1975), 29Google Scholar.