Policies towards Multi-Nationals

Abstract

The ‘complete package’ of private foreign investment presented by the multinational enterprise has not only the advantages frequently claimed for it, but has also serious weaknesses, particularly for international income distribution. High international mobility of scarce rent and quasi-rent earning factors (technical know-how, management, marketing), combined with no international mobility of unskilled and semi-skilled labour in highly elastic supply domestically implies an uneven division of gains. To prevent the lion’s share going to the lion, bargaining strategies are suggested that enable the developing host country to share in some of the rents and quasi-rents.

Reprinted from World Development, vol. 3, no. 6 (June 1975). This paper appeared in Spanish in a volume of Essays in Honour of Felipe Pazos, ed. Carlos Díaz-Alejandro. I am grateful to the Economic Development Institute of the World Bank and its director, Andrew Kamarck, who provided the facilites, the encouragement and the agreeable atmosphere in which this paper was written. I am also grateful to Constantine Vaitsos for helpful comments.