Collaborative/competitive TNCs and States by droberts27

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									Dan Roberts                                                                                March 4, 2010
Writing Assignment #2                                                                    Professor Balkan

                 Collaborative and Competitive Relationships Between States and TNCs

        The different relationships between states and transnational corporations (TNCs) will always be

collaborative and competitive (Dicken 12). Both actors are able to maintain their relative power by the

way in which they utilize their “key assets…and the spatial and territorial range and flexibility of each of

the actors” (12). The key assets in developing economic power are: capital, technology, knowledge,

labor skills, natural resources, and consumer markets. The conflict or cooperation between the states and

TNCs is embodied in these ways of maintaining their relative power. Both of these actors in the global

market have distinct powers in their relationship. Through the analysis of the relationships between

states and TNCs involved with NAFTA, the European Union, sweatshops, and the electronics industry in

southern Malaysia, their collaborative and competitive nature will be clear.

        As states and TNCs find a way to better their economic status within the global economy, they

will be exploring the different ways in which they can assert their power over each other. The states

assert their power in four distinct ways: as containers, regulators, competitors, and collaborators. The

TNCs maintain their power by being active suppliers of capital and job opportunities. The relationships

become complex as states assert their power as containers and regulators and conflict and collaborate

with TNCs. Yet, each state does not maintain the same power as another. Each state‟s power is directly

related to the size of its national economy, resource endowment, and relative position in the world

economy (179-182). TNCs have the same sort of restrictions on their power regarding their ability to

move capital, the number of their global positions, and the markets they dominate. The larger developed

states, such as the dominant G-7 economies, govern and organize the market intricacies of contemporary

economic globalization (174). This power utilized by the larger industrialized nations shapes the global

relationships between TNCs and states.

        The cooperative free trade area established in the North American Free Trade Agreement

(NAFTA) between Canada, the United States, and Mexico has enabled TNCs and states to collaborate in

an effort to maximize profits for all parties involved (The Corporation). This agreement is designed to
increase TNCs ability to invest abroad by eliminating most trade and investment restrictions between the

three countries (190). By eliminating trade policies such as tariffs, import surcharges, and embargo

restrictions the states involved are utilizing their regulatory power and influencing the flow of capital.

As TNCs invest in the cooperative states, local linkages supply opportunities for the creation of local

business. Furthermore, as the demand for materials and components rise as a result of local investment,

current firms will improve and new firms will be created (468). This positive change can be seen in the

TNCs involvement with the Mexican state: “Mexico‟s export growth rate of over 14 percent undoubtedly

reflected its increasing integration with the United States through the NAFTA” (47). Because of

Mexico‟s lower wages, the TNCs saw an oppo
								
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