Ques 5: Explain the following:( a ) M N E s a n d N e w I n t e r n a t i o n a l E c o n o m i c O r d e r ( b ) D y n a m i c s o f r e g i o n a l t r a d e g r o u p i n g s (c)WTO and the promotion and regulation of world trade

Answer (b)All over the world, economic centres of gravity are emerging - the US-Canada FreeTrade Agreement (with possible extensions to Mexico and others in the region),theEC 1992, the Asia-Pacific Economic Co-operation (APEC) and so on.Regional economic cooperation schemes have achieved varying degrees of success depending on the dynamics of political economy in the region and theirbilateral and multilateral economic relation with the rest of the world.In addition to the efforts for economic cooperation at the sub-regional, regionaland inter-regional levels that are being witnessed in several parts of the world,two new forms of cooperation are emerging - (a) inter-sub regional, and (b)extra-regional.In the former, example may be cited of the growth triangles that are emergingwithin The ASEAN region, e.g., the projects that are contemplated jointly by the Johorstatein Malaysia, Singapore, and Indonesia's Riau islands. Under this scheme, all threecountries are expected to benefit. Singapore is to increase its water purchasesfrom Johor against payment of US $ 118 million for land on which a dam is to be built.Singapore is to obtain water from Sumatra also. The growth triangle is envisagedtoattract MNCs as the triangle is to be developed by telecommunication skills andmanagement

expertise from Singapore and skilled labour and land supplied by Johorand Batam (the latter in Riau archipelago). Batam was originally conceived to bedeveloped as a free trade zone by Indonesia, but the growth triangle conceptseems tohave appealed more to Indonesia than that of a free trade zone. The benefit to Malaysia from the growth triangle is a planned US $ 755 millionbridge as a second land link between Singapore and Malaysia. The costs of thegrowth triangle concept have already been felt: as reflectedin the 40 timesincrease in land prices in Riau Islands after the signing of the Singapore-Riau economiccooperation agreement.Examples of extra-regional cooperation attempts are the APEC comprisingtheASEAN, Japan, Australia, New Zealand, South Korea and the US with extensiontothe three Chinas. As against this is the Malaysian proposal of the East AsianEconomic Grouping (EAEG), now called the East Asian Economic Caucuscomprising the ASEAN, Japan and the newly industrializing economies (NIEs).Several forms of cooperation are under discussion or are underway betweentheEuropean Community on the one handand the EFTA and East Europeancountries,on the other.Regional trade groupings include: (a) free trade areas where partners abolishdutieson mutual trade, but retain tariff schedules on extra-regional trade; (b)customs unionwhich have free trade between members but also have a common externaltariff; and (c) common markets which are essentially customs unions, but withadditionalprovisions for labour mobility and the harmonisation of trading standards andpractices.

Answer (c) The need for a world trade body was felt much earlier. TheInternational Trade Organisation (ITO) was proposed to be set up along withthe World Bank and the IMF on the recommendations of the Bretton WoodsConference 1944. The ITO was not setup but in its place GATT wasestablished by the US, UK and some other countries in 1947. GATT wasbiased in favour of the developed countries and was appropriately called the“rich men’s club”. The developing countries insisted on setting up of ITO. InUruguay Round of negotiations, WTO was proposed and the proposal becamea reality on 1

stJanuary, 1995. The World Trade Organisation (WTO) was thus established on 1st January,1995. Governments hadconcluded the Uruguay Round negotiations on 15thDecember, 1993 and ministers had given their political backing to the resultsby signing the Final Act at a meeting in Marrakesh, Morocco in April 1994.TheWTO is the embodiment of the Uruguay Round resultsand the successor tothe General Agreement of Tariffs andTrade (GATT).It is based in Geneva, Switzerland and some of its functions are:•Administering and implementing the multilateral and Plulilateral tradeagreements, which together make up the WTO.•Acting as a forum for multilateral trade negotiations.•Seeking to resolve trade disputes.

•Overseeing national trade policies.Promotion and Regulation of world trade is the primary responsibility of WTO andthis can be categorized as Transparency (Promotion) and Rule-based TradingSystem(Regulation). It can be depicted as a pictorial reference as below:- TransparencyPrinciples of WTODismantling Trade BarriersMFN TreatmentNational TreatmentFree TradePolicyEnvironmentProtectionCompetition Treatmentfor LDCsRuleBased TradingSystem

Transparency (Promotion)WTO aims at achieving transparency in world trade relations by obligatingmembers to publish their respective laws, regulations, judicial decisions andadministrative rulings pertaining to the classification or valuationof products forcustoms, rates of duty, taxes or othercharges affecting sale, distribution,transportation, insurance and warehousing with the objectives of enablinggovernments and traders to become familiar with them. This helps traders andexporters to plan

their trade and safeguard them against hassles. Some policiesrelated to transparency can be seen below-MFNTreatment Trade needs to be conducted without discrimination. Any member country shallnot discriminate between its trading partners-all memberscountries are granted“most favoured-nation” or `MFN status. MFN means that every time a membercountry lowers a trade barrier or opens up a market, it needs to extend thebenefits to all trading partners.National treatment: Non discrimination within a country This principle implies that imported a d locally produced goods should be treatedequally. Article III of the GATT 1994 states that “the products of the territory of any contracting party imported into the territory of any other contracting partyshall be accorded no less favourable treatment than that accorded to likeproducts of national origin in respect of all laws, regulations, and requirementaffecting their internal sale, offering for sale, purchase, transportation,distribution or use”.Free Trade Principle:(I)Optimal Utilisation of ResourcesLoweringtrade barriers is the best way of promoting trade. Trade ensuresoptimum utilisation of resources. All countries including the poorest have assets-human, industrial, natural, and financial-which they can employ to producegoods and services for their domestic market or to compete overseas. Biggermarkets, domestic as well as overseas, will help these countries produce moreand reap economies of scales. Liberal trade policies that allow unrestricted flowof goods and services will result in expanded markets.

Dismantling Trade BarriersPhysical restrictions on the import and export of goods are prohibited underGATT. However, member countries can protect domestic industry through tariff. The WTO is not a ‘free trade’ institution. It permits tariffs and other forms of protection but only in limited circumstances.(I)Rule based Trading System The WTO stands for rule based trading system. Towards this end, the WTO setsand enforces rules necessary for conducting world trade fairly. Through itsautomatic and speedier disputes settlement mechanism, the WTO adjudicates ondisputes between members. This helps inthe open trade between countries.(ii)Treatment for LDCsThe WTO contains special and differential treatment provisions for developingand least developed countries that run across the whole range of agreementscovered by WTO. In fact, there is a separate committee on trade anddevelopment that overseas the implementation of these provisions by developedcountries. There are specific provisions under all the WTO agreements that stipulate tradeconcessions for developing and least developed countries. These concessionsinclude waiver or deferral of obligations, transfer of technology and the like.(iii) Competition Principle The WTO system is designed to promote open and fair competition. Removal orreduction of tariffs and subsidies will expose locally produced goods and servicesto importedones. There is ‘level playing field’ between foreign and local goodsand services and this promotes competition between them. The WTO also seeksto

protect consumer interest by promoting competition among trading members.(iv) Environment Protection Thelast principle of WTO relates to the protection of environment. The preambleto the WTO agreement refers to the objectives of sustainable development andto the need to preserve the environment. Agreements on Technical barriers to Trade and Sanitary contain provisions to protect human, animal and plant life,health and the environment.

Answer (a) A Multi National Enterprise (MNE) has beendefined as one which hasits producing and trading activities in a number of countries and which has a

central organization regulating the activities of itsunits, across national frontiers,with specific globalobjectives.It may be added here that recently some MNEs have decentralized their decision-making. Some large MNEs with a wide variety of products operating in a largenumber of countries are organizing their subsidiaries, branches and affiliates onthe basis of regional and product based profit centres. This, however, has notradically altered the importance of central decision making in the concernedMNEs. The final decisions on a number of issues of vital importance in suchsituation still rests with the centre i.e. the parent organization. It is alsoimportant to clarity in this context what one means when one talks of MNC’sculture and the host countryA host country is an independent nation state where an MNC has established itsbusiness operations through

either subsidiaries or branches and affiliates. It isalso important here to make a distinction between adeveloped host country anda developing host country. All the countries of the organization for EconomicCooperation and Development (OECD) are treated as developed host countriesand countries treated by the UNas developing countries are treated asdeveloping hostcountries in this unit. The latter include countries in Asia, Africaand Latin America, excluding of coursemembers of the OECD such as Japan. The corporate objectives, management practices and procedures of MNEs willdiffer from country to country. For instance, corporate objectives, managementpractices and procedures of MNEs from the US differ from those from Japan andGermany. The fact, however, remains that despite a number of variations; MNEsof all Major developed countries possess some common elements which cannotbe lostsight of. This understanding will help us to generalise about their businessculture.Keeping in mind the MNEs the international trade come up with aneconomicorder which was like a charter to be followedby the countries in order to have aregulated trade regime. The New International Economic Order (NIEO) was a set of proposals put forwardduring the 1970s by developing countries through theUnited Nations Conference on Trade and Development to promote their interests by improving their terms of trade, increasing development assistance, developed-country tariff reductions,and other means. It was meant to bea revision of the international economicsystem in favour of Third Worldcountries, replacing theBretton

Woods system,which had benefited the leading states that had created it – especially theUnited States The term was derived from the Declaration for the Establishment of a NewInternational Economic Order, adopted by the United Nations General Assemblyin 1974,and referred to a wide range of trade, financial, commodity, and debt-related issues (1 May 1974, A/RES/S-6/3201)[1]. This followed an agenda fordiscussions between industrial and developing countries, focusingonrestructuring of the world's economy to permit greater participation by and benefits todeveloping countries(also known as the "North-South Dialogue").Along with the declaration, a Programme ofAction and a Charter of EconomicRights and Duties of States were also adopted.In the 1970s and 1980s, the developing countries pushed for NIEO and anaccompanying set of documents to be adopted by the UN General Assembly.Subsequently, however, these norms became only of rhetoricaland politicalvalue, except for some partly-viable mechanisms, such as the non-legal,non- bindingRestrictive Business Practice Code adopted in 1980 and theCommon Fund for Commodities which came in force in 1989. The main tenets of NIEO were:

•Developing countries must be entitled to regulate andcontrol theactivities of multinational corporationsoperating within their territory.•They must be free tonationalizeorexpropriateforeignpropertyonconditionsfavourable to them.•

They must be free to set upassociationsof primary commodities producers similar to theOPEC; all otherStatesmust recognize thisright and refrain from takingeconomic,military, orpoliticalmeasurescalculatedto restrict it.•International tradeshould be based on the need to ensure stable,equitable, andremunerative pricesforraw materials, generalizednon- reciprocal andnon-discriminatory tariff preferences, as well astransfer of technologyto developing countries; and should provideeconomic andtechnical assistancewithout anystrings attached.

Ques 4. (b) Briefly explain the stages in cross-cultural negotiation process.Answer. The domain of business in international and domestic market is a verydifferent scenario. As in international market one not only has to follow thenorms of business culture but also has to keep in mind the sentiments andetiquettes of the host country also..Differences between International and Domestic negotiationsPoints important in international (cross-cultural) negotiations which arenormally unimportant in domestic negotiations and which could become barriersto global deal include: 1) negotiating environment, 2) cultural and sub-culturaldifferences (It is important to know whether you are negotiating with a Hindu ora Moslem in India, with an Moslem or Copy in Egypt, or with a Congo or Mulubain Zaire.), 3) ideological differences, 4) foreign bureaucracy, 5) foreign laws andgovernments, 6) financial insecurity due to international monetary factors, and7) political instability and sudden political and

economic changes. Barriersincrease the risk of failure and lengthen the time it takes to arrive at adeal.Many foreign governments must be convinced that a deal is consistent with theircountry’s overall economic priorities before they will enter into discussions.STAGES OF CROSS CULTURAL NEGOTIATIONSAlthough all negotiations include these four aspects,strategies, tactics, content,duration and sequence spent in each phase, emphasis and importance of phasediffer between cultures. Nontask sounding focuses on establishing a relationshipamong the negotiating parties. During this stage, information specific to theissue under negotiation is not considered; rather, the parties seek to get to knoweach other. Task-related exchange of information focuses on providinginformation directly connected tothe issue under negotiation. During this stage,each party explains its needs and preferences. Persuasion focuses on efforts tomodify the views of the other parties and sway them to ‘our’ way of thinking. This stage of negotiations is often intertwined with otherstages (i.e., persuasiongoes on while exchanging information and making concessions). Concessionsand agreement is the culmination of the negotiation process at which anagreement is reached. To reach an agreement that is mutually acceptable, eachside frequently must give up some things; concessions by both sides are usuallynecessary to reach an agreement.All business communications, whether domestic or international, should be seenin the context of human communication. The process by which verbal and non-verbal language is shared is communication, communication has no determinatebeginning or end; it is an ongoing exchange of messages between two or morepeople. Human

communication travels through a variety of signals, not justwords, and depends on thecontextfor its meaning.CROSS – CULTURAL NEGOTIATION PROCESSWhether business would or would not occur depends on whethernegotiations have or have not been successful.The negotiations would be on afirm ground if the negotiators understand and appreciate the barriers toandcomplexities of cross-cultural communication.Research on cross-cultural communication indicates that within anyculture, people go through four stages in the negotiation process.Relationship buildingExchange of task related informationPersuasionMaking concessions and agreementRelationship Building The first step in negotiations involves building interpersonal relationshipsbetween the negotiating parties. This step is crucial in the negotiation process. Japanese realise the importance of this stepand, therefore, spend considerabletime in building relationships with the other party. On the other hand, Americansin general consider this aspect of thenegotiating process as less important andthus spend much less time on it than do the Japanese. Japanese spendconsiderable time in informal interaction with the members of the other party ingoing round the town, eating and drinking. In this way formal barriers arebroken down between the parties and a

sense of trust and respect slowlydevelops which becomes the basis for negotiating contracts. In fact,lookingfrom Asian angle, developing a mutually trusting relationship is the cornerstoneof negotiatedagreements. While Americans tend to get down to business intheir very first meeting, Japanese like to talk in general, having in their mindsthat the preliminary sessions are meant simply to know each other well. Japanese thus desire to build a trusting relationshipbefore doing business sothat frustration and failure do not occur later.In many countries, personal commitments to individuals, rather than thelegal system, from the basis for the enforcement of contracts. Effectivenegotiations, therefore, allow plenty of timein their schedule for relationshipsbuilding with bargaining partners. As mentioned above, this processmay usuallytake the form of social events, tours, ceremonies along with much lightconversation of general nature, while both sides get to know one another. Information Exchange The second phase of the cross-cultural negotiations involves informationexchange. In this phase the parties make presentations and state theirpositions. A question-and-answer session usually ensues, and alternatives arediscussed.It is often difficult to understand the other party’s situation, intents and needseven if the latter belongs to one’s own culture,but understanding these mattersis even more difficultwhen the other party is from another culture. People fromdiffering cultures may view problems, realities, and business operations indifferent ways. It takes a more sincere and sustained effort to clearly articulateones own situation and understand other party’s situation.

The Japanese rate this step as important and spend a fair amount of time on theissues involved. Americans,on the other hand, rate this as of moderateimportanceand spend relatively little time on this phase. Therefore,misunderstandings and problems may occur based on different ways thesecultures value this phase. From an American viewpoint, this stage is one which is straight forwardobjective and efficient. However on study points out that negotiators from othercountries continue to take a more indirect approach at this stage. Mexicannegotiations are usually suspicious and indirect, presenting little substantialmaterial and lengthier, evasive conversation. French negotiators enjoy debateand conflict and will often interrupt presentations to argue about an issue even if it has little relevance to the topics being presented. The Chinese also ask manyquestions and they delve specifically and repeatedly into details at hand. TheChinese presentations contain only vague and ambiguous material. Persuasion Persuasion involves influencing the other party to adopt one’s view point,position, or beliefs. Outcome in any negotiation very much depends upon thepersuasive abilities of the parties. It is during this stage that the hard bargainingstars. Typically, both parties try to persuade the other to accept moreof theirposition and to give up some of their own. Americans view this phase as most important part of the negotiationprocess and spend quite a bit of time in the use of persuasive tactics. Americantakes up the persuasive part rather too early in the process and expects theparty to agree to their offer,bit, contract, etc. The Japanese also rate this phaseas important and spend a fair amount of time on

it as well. However, for the Japanese, persuasion cantake place quickly with appeals to logic and rationality. They do not consider the need for warmthin personal relationships as aprerequisite for fruitful negotiations.International managers usually find that this phase of bargaining fraught is withdifficulties because of the different uses and interpretations of verbal and non-verbal behaviours. Studies of the negotiating behaviour have revealed the sueof certain recognizable tactics, which skillednegotiations should take note of. The results of a study comparing the use of various tactics (promises,threats,and so forth) by the Japanese, Americans and Brazilians indicate that the Japanese and Americans tend to be more alike in the use of these behaviours,whereas the Japanese and Brazilians are less alike. For example, the Braziliansuse fewer promises andcommitments than the Japanese or the Americans, butthey use commands far more often. Just in any other negotiation, dirty tricks orrough tactics may also be sued by international negotiations. In a survey of 18U.S. – Korean joint ventures, U.S. executives reported that the behaviour of theKoreans during the course of negotiations was often “abusive”, resulting inshouting matches, desk pounding and chest beating. International managers,therefore, must keep in mind that what seem like dirty tricks to the negotiatorsof one nation maysimply be the way some other culture conducts negotiations.In some South American countries, for example, it is common to startnegotiations with misleading or false information. The messages emanatingfrom non-verbal behaviour are often mostdifficult to dealwith – the use of voice intonation facial and body expressions,eye contact, etc. Non-verbal behaviours are ingrained aspect of culture used bypeople in

their daily lives; they are not specifically changed for the purposes of negotiation. Concessions and Agreement Giving concessions and arriving at an agreement is, in fact, a logicalconsequence of persuasion process and rests on the principle of mutual give andtake. The Japanese value this phase lesser than the Americans do (in relation toother phases), though they spend about the same amount of time as Americansdo. Americans in general negotiate sequentially i.e., they discuss and attempt toagree on one issue at a time.They attempt to separate the issues intopragmatic parts. Throughout the bargaining process they make many smallconcessions, and expect the opposite party to reciprocate. They then finalise thelist of concessions to be incorporated into the overall agreement. The Japanese do not like to spend a lot oftime and energy in making smallconcessions in reciprocation to the opposite party’s concessions. Instead, theylike to view the process holistically, trying to accept each other’s views andneeds build trust and then make concessions, if any, at the end as a form of warping up the negotiations.

Ques 4 (a). What factors influence hybrid/mixed strategies involving partialrationalization of production and marketing facilities and partial localmanufacturing?Answer. A company following globalsourcing global sourcing strategy maypurchase its requirements from import agents, and negotiations maytake placebased on home country currency. This is a passive approach. A more aggressiveapproach may be to have its buyers travelling overseas seeking out sources ofsupply. Alternatively, it may have purchasing officeslocated in foreign countries. The personnel overseas may be responsible for quality control, product

design,and for supplying materials to foreign fabricators as well as for purchasing andshipping. The implementation of a global sourcing strategy requires appropriateorganizational support, global research on supply sources and personnelexperienced in many dimensions of international trade. The buyersof thecompany must be familiar with foreign exchange risk, tariffs, quotas,international transportation, difference in cultural environment, and many otherimport issues.It should be mentioned that the choice between centralised versus decentralisedsourcing is not of the either/or type. It has been observed that many firms useboth the alternatives. High tariff rates, transportation cost,foreign exchangefluctuations tend to discourage centralised sourcing in certain parts of the world,and for certain products, the firm may use centralised sourcing. In other parts of the world andfor other products, it may use a decentralised system. Forexample, Dow Chemical Company has established larger chemicalmanufacturing units in West Germany andthe Netherlands to supply chemicaland petrochemical products for entire European markets, but its consumeroriented products are manufactured in variouscountries to meet local demands.Such hybrid or mixed strategies involving partial rationalization of productionand marketing facilities and partial local manufacturing reflect the influence of the following factors:1) Technology : Capital intensive industry tend to provide economies of scale onmuch higher volume through reduction of overhead costs. Capital intensiveindustries through are more likely to have centralised facilities.2) Market competitiveness: In an industry where there is an intense competition,there is considerable pressure to reduce unit costs. Consequently, productionand marketing

rationalization become almost a necessity.3) Interchangeability of parts: Rationalising the production facility formanufacturing parts etc. is quite difficult unless the products are standardized.Consequently, products which are at the mature stage of their product life cycleare more likely subject to production rationalization.4) Government demands and pressures: Many developing countries requiremultinational companies to manufacture locally. The objectives behind thisrequirement are to achieve self sufficiency and to generate economic andindustrial growth. Countries such as India, Indonesia, Malaysia,Brazil and Peruhave required local manufacturing, anduntil recently, have imposed stiff dutiesand penalties on goods imported from other countries. It may be pertinent tomake a distinction between global sourcing strategy and a global strategy (orglobal logistic strategy). A multinational enterprise following the latter strategywould normally like to havethe sourcing for its target markets from a centralisedsystem perspective. Rather than determiningsupply source independently foreach market, the enterprise can seek to strengthen its competitive position byconsidering all the markets simultaneouslyand by designing a least cost supplystrategy for the system as a whole. It may rationalize its manufacturingoperations by having an integrated network of plants, each plant may specializein one ormore products or components, and each plant may servea world or aregional market. Plants may also specialise by stages in the production processand canbe located indifferent countries according to location advantages.Extensive trans-shipments of components and finished products betweensubsidiaries indifferent countries is usually the result of such

global (or globallogistic) strategy. The global strategy can reduce unit cost in industries where economies of scaleare significant and not fully exploited within the size of national market. Onceeach subsidiary no longer manufactures a full product line, the management of export activities becomes extremely important. Export orders have to bedirected to centre and then allocated to the appropriate subsidiary. Needless tomention the implementation of such a strategy requires the use ofexport/importexpertise, and this capability must be exercised includes harmony with themanagement of foreign production.

in this respect.MNCs Business CultureOne of the majorareas of controversy is the impact of MNCs on host countries'culture. This has several dimensions which we shall discuss:Market Promotion and Advertising: Itis known that MNCs rely heavily onadvertising and market promotion to retain and enhance their market share.These advertisements and market promotion techniques very often have theirbasis in the advertisement and market promotion techniques and approachesadopted in home countries of the parents. Thus, it is argued that the MNCs bringwith them to the host country

their cultural bias powerfully based in developedcountry. This, according, to some, damages the local culture. This problem maynot be serious in host countries which have similar cultural patterns. But in thosehost countries which belong to different cultures, this problem becomes fairlyacute. Their advertisements and sales promotions have very often distorted localcultural preferences and thus created substantial confusion in the host countries.It may also happen sometimes that such advertisements may not bring thedesired result to the MNC as has been theexperience in the fields of food, drinks and clothes.While the local enterprises are imitating theMNCs in respect of advertisementand market promotion,MNCs are also fast learning the necessity of adaptingtheir promotion campaigns consistent with a host country's culture although themajor refrain remains the global market approach of the MNCs where thematerial differences are expected to be either eliminated or reduced. MNCs and Social Responsibility: Modern business is expected not to overlook itssocial responsibility. While the government's intervention is disliked, there isincreasing realization that modern business must realize its social responsibility. The. MNCs may havedifferent perceptions of social responsibility. In the homecountry, they can be more sensitive to the national responsibility whereas in thehost country, especially in a developing country, it could be less.This tendency ishowever changing although very slowly. The MNCs are perhaps realising that it isin

theirlong-term interest to acknowledge their social responsibility in the host countryalso. But the Bhopal disaster case which was caused by the leak of gas from theUnion Carbide Plant, does not give much hope that MNCs would behave with fullsense of responsibility. The irresponsible behaviour of the, Union Carbide causedmisery to a large number of inhabitants of Bhopal MNCs often sell medicines indeveloping host countries which have been banned intheir home countries.

MNCs and Environment Protection in Host Countries: MNCs are underincreasing pressure by their home governments to give up the technologieswhich damage the environment. Hence MNCs are choosing countries whereenvironment regulations are weak. It is likely that MNCs are not mindful of theenvironmental disaster they create in a host country. What is more concerning isan intellectualsupport to such a shift as has been argued by the Vice-President of the WorldBank, Professor Lawrence Summers. According to him the harm from the shiftingof environmentally pollution prone industries to the developing countries will befar less than if these industries were operated in the developed countries for thepopulation of developed countries has lower limits of tolerance of environmentalpollution and higher level of health consciousness than in the developingcountries.Restrictive Business Practices: One of the important aspects of the MNCs'operation has been their restrictive business practices which affect the free operation of their subsidiaries, affiliates and branches in host countries. Theserestrictive business practices include typing

imports to specific sources of interest to MNCs, conditions of technology transfer, price fixation, exports,restrictive use of brand names and trademarks etc.

Efforts at De-stabilisation: The history of MNCs shows that they have at timestaken recourse to de-stabilisation of inconvenient governments especially indeveloping countries However, MNCs have been found not to be indulging inpolitical de-stabilisation in the developing countries during the latter half of theseventies and the eighties. The absence of such a phenomenon now can beattributed to a few main factors:(i)The MNCs nolonger needed to indulge in political de-stabilisation as theinternational ideological environment in the eighties had been suchthat there seemed no basic contradiction between the objectives of theMNCs and the governments of most host developing countries.(ii)The MNCs appreciated the fact of independent governments in thedeveloping countries. These governments have developed the capacityto cope with such situations or contingencies. Similarly, the hostdeveloping countries also recognized the need to adhere to thecommitments made by them. Therefore, in the eighties one witnessedsubstantially lesser number of nationalizations and expropriations thanhad been in the sixties and the early seventies.(iii)The MNCs were not very much interested in raw materials in theeighties. They were steadily withdrawing from these sectors, thus removing theprime cause of confrontation between the host country governmentsandthe MNCs.(iv)The emerging importance of smaller MNCs in their own countries has alsocontributed to the growth of confidence of developing countries in the MNCs.