Dicken talks about relative bargaining powers of TNCs and states that “such relationships revolve around their relative bargaining power: the extent to which each can implement their own preferred strategies” (Dickens 2011 pg. 225). In this he means that the TNCs have a great advantage to peruse a work environment that has a better cost to profit ratio, and the states can create taxes and guidelines that they have to follow. In short both sides can create good and bad scenarios for each other. In the article I have read how Mexico is a prime example of this relationship between TNCs and the State.
“The Mexican results, both the positive (renewed growth, capital inflows, increased and diversified exports, and reduced inflation) and the negative ones (foreign exchange crisis, trade and current account deficits, and weak capital formation), are outcomes directly related to the adoption of neo-liberal policies oriented towards reducing the role of thestate in the economy, Mortimer notes” (Raghavan, 1998).
In the article, Michael Moore, a senior economist at the Economic Commission for Latin America and the Caribbean (ECLAC), analyzed the performance of the automobile and economic sectors. The U.S. automobile TNCs investments have led to Mexican production facilities becoming globally competitive. However, instead of using national suppliers, the production has been reoriented into exports, which eventually affected Mexico’s auto-parts industry.
This shows that Dicken’s statement holds true that TNCs can produce both good and bad results in the host country’s economy.
Dicken, P. (2011) Global Shift. New York, London: The Guilford Press
Raghavan, C. (1998). Globalization’s Political Economy and the Role of the State. Retrieved from http://www.twnside.org.sg/title/role-cn.htm