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INTERNTIONALRELATIONS
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IMPACTOFMNCSONINTERNATIONAL
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MERITS& DEMERITSOFMNCS
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INTERNATIONALPOWERSOFMNC
Tax break
A deduction in tax that is given in order to encourage acertain economic activity or a social objective.
Economic Imperialism
The geopolitical practice of using capitalism, businessglobalization, and cultural imperialism to control a
country, in lieu of either direct military control or indirectpolitical control.
Market Withdrawal
The act or threat of removing one's goods or services fromthe consumer market, potentially reducing the supply of
a product, or of jobs.
Direct control
over foreign affiliates/subsidiaries18
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ROLEOFMULTI-NATIONALCORPORATIONSIN
INTERNATIONALSYSTEM
Multinational corporations have grown and developed
on a large scale in 20thcentury.
Today multinational corporations are not only
production centers that supply crucial and commercial
goods to us.
Their integrating economic power evolves to an
influence that can even effect political and economic
relations between nation states.19
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CHARACTERISTICSOFAMULTINATIONAL
CORPORATION
A MNC tends to be an oligopolistic corporation in whichownership, management, production and sales activitiesextend over several national jurisdictions.
It is composed of a head office in one country with acluster of subsidiaries in other countries.
It can use many kinds of instruments to create businessareas.
They frequently do this by Foreign Direct Investment(FDI).
MNCs not only have multinational investments but alsomultinational human resources.
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THE IMPACT OF MULTINATIONAL CORPORATIONS ON
INTERNATIONAL RELATIONS
MNCs have become massive in scale and have
come to exercise a major influence over political,
economic and social developments throughoutthe world.
The un-stoppable rise of multinationals gave them
both an economic and political power to manipulatestate actions.
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IMPACTS
The emerging global order is spearheaded by a few
hundred corporate giants, many of them are bigger
than most sovereign nations.
The new giant firms of the 21st century have
achieved something that no other nation could
manage today. They have reached millions of
people through different kind of global webs like
shopping, culture, workforce and finance.
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IMPACTS
The rise of multinationals has threatened
the absolute power of nation states.
Nowadays it seems that the sovereign
states are feeling naked. Concepts such as
national sovereignty and national economic
strength appear curiously drained ofmeaning.
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IMPACTS
Both domestically and internationally, states
start to share their political and economic
power with institutions like MNCs.
While they were crossing the border they did
not only interact with the host governments but
they are also cooperated with their home
governments.
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GLOBALIZATIONANDMNCS
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GLOBALIZATIONANDMNCS
When multinationals broadened their businesses,
they became great political and economic tools for
their home governments to interfere in domestic
affairs of their neighbors.
Globalization and interdependence between states
and firms came to a point to affect our social,
political, economic and cultural lives.
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GLOBALIZATIONANDMNCS
The world had become more like a global village
where people could meet, trade, interact and effect
each other more than ever.
Nation states, even the wealthiest or the most
powerful ones like U.S, cannot stand alone
anymore in front of multinational corporations in
economic and political arenas.
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Governments promote market friendly policies in order
to take the advantage of the new globalized economy
and in order to cope with the multinationals.
American leadership brought globalization and
globalization brought the multinationals to be one of theleading actors not only on the economic platform but
also, eventually on the political platform.
The multinational corporation not only promises themost efficient use of the world resources but as an
institution it poses the greatest challenge to the power of
a nation-state.29
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CHALLENGESBYMNCS
The challenge that MNEs pose against thesovereignty of the nation state have different
degrees.
Economic sovereignty reflects the ability of a
government to choose how to best to manage its
resources for wealth creating activities.
Cultural sovereignty reflects the freedom of a country
to determine its own way of life, ideologies and values
of other societies.
Legal sovereignty defines a countrys authority todevise its own laws and regulations, independent of any
outside interference.
Political sovereignty embraces economic, cultural and
legal sovereignty.30
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DIPLOMACY
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INTERDEPENDENCEANDTRIANGULAR
DIPLOMACY
Multinational firms are becoming more like
statesmen as they seek corporate alliances to
enhance their capacities to compete with others for
world market shares.
These structural changes in international political
economy have altered the nature of the game thus
affecting the actions and responses among firmsand states.
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TRIADSOFRELATIONSHIPS
States are losing their power to pursue independentpolicies and now must master the new game oftriangular bargaining.
The new game is about keeping relations at a levelwhich please everyone at the same time.
States are now in the middle of a Bermuda triangle.
Governments need to manage a series of difficult trade-offs among competing internal and external objectives.
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NEWDIPLOMACY
New diplomacy has three critical ingredients:
Bargaining among states for power and influence.
The competition among firms contesting the world
market and the specific bargaining between states
and firms for the use or creation of wealth-
producing resources.
Finance and knowledge.
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NEWDIPLOMACY
Changes in these structures throughout in the last
century and in this century have also created new
possibilities for obtaining wealth.
States and multinational corporations adjust
themselves to these changes in order to take the
best advantages from the triangular diplomacy of
world affairs.
Not only in the international arena but also in
domestic politics the influence of state-firm
bargaining has proportionally grown.35
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FUTUREOFMNCS
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CONCLUSION
From the daily products we use to gigantic power plants,
military aircrafts and petroleum refineries we have seen
the footprints of giant multinational corporations in all
parts of life. Multinationals have become an
undeniable part of our lives.
As the citizens of nation states we have accepted their
existence and are being benefitted from them.
The influence of multinational corporations on
international relations and mainly the effect of American
multinationals on American foreign policy are well
known and accepted issues.39
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THANKYOU
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