The world's multinational enterprises face a spell of rough weather, political economist Ray Vernon argues, not only from the host countries in which they have established their subsidiaries, but also from their home countries. Such enterprises - a few thousand in number, including Microsoft, Toyota, IBM, Siemens, Samsung, and others - now generate about half of the world's foreign trade. So any change in the relatively benign climate in which they have operated during the 1990s will create serious tensions in international economic relations. The warnings of such a change are already here. In the United States, interests such as labour are increasingly hostile to what they see as the costs and uncertainties of an open economy. In Europe, those that want to preserve the social safety net and those who feel that the net must be dismantled are increasingly at odds. In Japan, the talk of "hollowing out" takes on a new urgency as the country's "lifetime employment" practices are threatened, and as public and private institutions are subjected to unaccustomed stress.
The tendency of multinationals in different countries to find common standards has been viewed as a loss of national sovereignty and a weakening of the nation-state system, producing hostile reactions in home countries. The challenge for policy makers, Raymond Vernon argues in this text, is to bridge the quite different regimes of the multinational enterprise and the nation-state. Both have a major role to play, and yet must make basic changes in their practices and policies to accomodate each other.
Raymond Vernon was Professor of International Affairs, Emeritus, Harvard University.
Preface Setting the Context: Multinational Enterprises in a System of Nation-States A Rough Take-off for the Multinationals Calibrating the Multinationals' Importance Multinationals' Behavior in International Markets The Challenge: Accommodating Multinationals and Nation-States Tensions in the Background: Conflict between Multinational Enterprises and Nation-States The Nation-States' Struggle for Jobs Taxing Multinationals Security for the Nation-State Conflicts of Jurisdiction, Culture, and Principle Inside the Emerging Economies: High Stakes for Nation-States and Multinational Enterprises Latin America Fading Stars of Asia Transitional Economics: From Hungary to China India Conclusions Inside the Industrialized Economies: New Sources of Tension The Case of Europe The Case of the United States The Case of Japan Common Problems, Common Responses The Struggle over Open Markets: The Gathering Clouds Ambivalence in the United States and Europe Multinationals and the Struggle for Public Resources Uncertainties in the International Political Climate Righting the Balance: Possible Policy Responses The Search for Global Principles Bilateral Agreements Industry-Centered Agreements Regional Agreements Possible New Initiatives Unilateral Measures Reprise Notes Index