Multinational Corporation and National Regulation: An Economic Audit

Abstract

Intensified internal social needs and changed expectations of the role of government obligate governments everywhere today to accept responsibility for an increasing number of economic and social objectives. National economic goals are defined and policies devised to further these goals. As a principal agent of economic change, the multinational corporation (MNC) is frequently the target of these economic policies. However, the multinational corporation has its own objectives and concerns. With its numerous alternatives and greater flexibility in reallocating resources, the MNC will usually respond differently to government policies than will purely domestic corporations. Yet all too often governments misunderstand the nature of the multinational corporation and devise regulatory policies which have unanticipated, even undesirable, consequences. A vicious cycle then ensues as governments attempt to regulate MNC behavior still further.