Powerful Multinational or Persecuted Foreigners: ‘Foreignness’ and Influence over Government
AbstractOne of the enduring themes of the globalization debate is whether international law should be strengthened to protect foreign firm from discriminatory host governments, or rather strengthened to protect host governments from powerful multinational firms. This paper uses firm-level data from the World Business Environment Survey (WBES) to lend some empirical evidence to the debate. In doing so it contributes to academic understanding of what a `foreign firm' is, and challenges the notion that institutional superiority makes OECD governments less prone to anti-foreign bias. Although the terms `foreign firm' and `multinational subsidiary' are often used interchangeably, in the WBES data the managers of only about half of the firms with more than ten percent foreign ownership view themselves as part of a multinational. This distinction between multinational and non-multinational foreign firms was important in regression analysis of self-reported influence over government. In non- OECD countries - where we find no evidence of anti-foreign bias - multinationals appear significantly more influential than other firms. Meanwhile, in OECD countries, foreign non-multinationals do appear at a disadvantage in terms of influence relative to domestic firms, but this `liability of foreignness' does not appear to extend to foreign-multinational affiliates.
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Bibliographic InfoPaper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 638.
Date of creation: Apr 2010
Date of revision:
Multinational Firms; Foreign Firms; Political Economy; Government;
Find related papers by JEL classification:
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- F52 - International Economics - - International Relations and International Political Economy - - - National Security; Economic Nationalism
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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