Multinational Corporations and State Relations

Author 4

MultinationalCorporations and State Relations


MultinationalCorporations and State Relations

Thepresence of multinational corporations in a country is significant ina country and is felt by the economies of the countries they setbusiness in. As a result, MNCs are characteristically interactivewith the governments and international organizations in the course oftheir global business. They interact with states by seekinggovernment support such as tax exempt, lease privileges and access tonatural resources1.As a result, MNCs regularly engages in agreements with governmentsand international bodies as a way of securing their globalbusinesses. Apart from agreements, MNCs use the leverage of financialpartnerships with governments and international organizations to gaincompetitive advantage. For instance, some MNCs relate to governmentsthrough means like lending, sponsoring state programs and supportinginternational organizations.

However,MNCs may negatively relate with states and internationalorganizations as they seek to maximize their profits and minimizetheir costs. In the quest to minimize labor costs, Nike, Incoutsourced its production with factories that used under-ageemployees in Asia2.As a result, Nike, Inc had a long conflict with Asian governments andinternational human rights organizations. The company was accused ofchild labor and watching human rights abuses be perpetrated by theiroutsourced suppliers. Moreover, many multinationals are accused ofover-exploitation of natural resources of developing countries.

MNCshave characteristic large structures of global business andinternational relations. Through the leverage of their largestructure, MNCs gain significant control of markets and resources. Inaddition, MNCs use their financial strength to establish businessoperations and relationship with every country3.With this relationship, MNCs engage in aggressive marketing toestablish and maintain business dominance in these countries.Moreover, multinational corporations establish strong corporateprofiles that allow them to relate with states and internationalorganizations through agreements that favor their global business.


Beder,S. (2002). Putting the Boot In.Retrieved From,

&lt 15, 2014

Nau,Henry. Perspectiveson International Relations : Power, Institutions, Ideas.Washington, DC: CQ Press, 2012.

1 Nau, Henry. Perspectives on International Relations : Power, Institutions, Ideas. Washington, DC: CQ Press, 2012.

2 Beder, S. (2002). Putting the Boot In. Retrieved From, &lt November 15, 2014

3 Nau, Henry. Perspectives on International Relations : Power, Institutions, Ideas. Washington, DC: CQ Press, 2012.