JSPES, Vol. 47, No. 3-4 (Fall-Winter 2022)
pp. 211-229

State Strength, Markets, Regime Type and Bargaining with Transnational Corporations

Shah Tarzi
Department of Political Science and International Studies
Bradley University

This study offers a fresh theoretical and analytical perspective on the dynamics of bargaining between transnational corporations – that is to say, multinational corporations, or MNCs – and national governments in the less developed countries (LDCs). Unlike the prevailing obsolescing bargaining model, this study introduces a key analytic distinction between ‘potential bargaining power’, and ‘projectable bargaining power’. Accordingly, the study takes account of constraints on the exercise of power by host governments’ institutions, by MNCs and by their Western home governments.

 The study finds four potent influencers or fundamental factors which play decisive roles in converting the ‘potential bargaining power’ of less developing countries into ‘projectable bargaining capability’, moving the process to the implementation stage. The four are: (1) state strength and institutional capacity of the state; (2) the size and rate of growth of the host country’s market; (3) the level of competition among MNCs for resources provided by host country; and (4) the effects of ‘regime type’ on bargaining.

Importantly, through the prism of bargaining dynamics, this study offers a way to think about the level of analysis problem in international relations theory in terms of the interplay between society, the state and the international system.