Bargaining with Multinationals

In Bargaining with Multinationals, Loewendahl scrutinises the relationship between multinational corporations and regional economic development using an international political economy framework of bargaining between governments and multinational companies (MNCs). He critically analyses the role of foreign investment in economic development, and examines how governments can link inward investment to regional economic development. The book opens with an analysis of the globalisation of production and technology, and shows that while there are increasing opportunities for locations to benefit from FDI as MNCs move towards a network form organisation, the location of advanced activities is likely to be regionally differentiated. Loewendahl also demonstrates that MNCs are able to extract large incentives from governments due to their greater structural power. A political economy model of bargaining is developed n order to analyse Nissan's automotive investment and Siemens' semiconductor investment in the UK. Loewendahl finds that while the UK has been highly successful in attracting inward investment, the lack of an industrial strategy to link FDI with indigenous competitiveness has limited the long term contribution of FDI to economic development. Regions within the UK have lacked the institutional capability to develop alternatives to attracting FDI. Through a case study of North East England, Loewendahl reveals the growing importance of after-care policies in embedding MNCs and the re-focus of resources towards supporting technology and indigenous companies. He goes on to recommend a framework to integrate endogenous and exogenous approaches to development and proposes a greater role for the region and the European Union to control investment incentives and monitor multinationals.