MNE Independence
MNE Independence
The discussion thus far has centered on the fear that international firms are unduly influenced by their home governments. Many observers also fear that these companies can, by playing one country against another, avoid coming under almost any unfavorable restrictions. For instance, if they do not like the wage rates, union laws, fair-employment requirements, or pollution and safety codes in one country, they can move elsewhere or at least threaten to do so. In addition, they can develop structures to minimize their payment of taxes anywhere. This ability to play off one country against another is more likely to be evident when negotiating initial permission to operate in a country and among countries within a regional trade agreement. For example, France has become less bureaucratic in approving FDI entries, a change that was implemented after an experience in which General Motors opened a plant in Spain to export to France after France had refused the GM entry.31 However, the fact that, once operating, companies are generally reluctant to abandon fixed assets in one country to move abroad indicates that these charges are probably exaggerated. Furthermore, the country from which a firm moves can usually restrict the importation of the goods produced abroad under the more favorable conditions.
The discussion thus far has centered on the fear that international firms are unduly influenced by their home governments. Many observers also fear that these companies can, by playing one country against another, avoid coming under almost any unfavorable restrictions. For instance, if they do not like the wage rates, union laws, fair-employment requirements, or pollution and safety codes in one country, they can move elsewhere or at least threaten to do so. In addition, they can develop structures to minimize their payment of taxes anywhere. This ability to play off one country against another is more likely to be evident when negotiating initial permission to operate in a country and among countries within a regional trade agreement. For example, France has become less bureaucratic in approving FDI entries, a change that was implemented after an experience in which General Motors opened a plant in Spain to export to France after France had refused the GM entry.31 However, the fact that, once operating, companies are generally reluctant to abandon fixed assets in one country to move abroad indicates that these charges are probably exaggerated. Furthermore, the country from which a firm moves can usually restrict the importation of the goods produced abroad under the more favorable conditions.
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