The world’s multinational enterprises face a spell of rough weather, political economist Ray Vernon argues, not only from the host countries in which they have established their subsidiaries, but also from their home countries. Such enterprises—a few thousand in number, including Microsoft, Toyota, IBM, Siemens, Samsung, and others—now generate about half of the world’s industrial output and half of the world’s foreign trade; so any change in the relatively benign climate in which they have operated over the past decade will create serious tensions in international economic relations.
The warnings of such a change are already here. In the United States, interests such as labor are increasingly hostile to what they see as the costs and uncertainties of an open economy. In Europe, those who want to preserve the social safety net and those who feel that the net must be dismantled are increasingly at odds. In Japan, the talk of “hollowing out” takes on a new urgency as the country’s “lifetime employment” practices are threatened and as public and private institutions are subjected to unaccustomed stress. The tendency of multinationals in different countries to find common cause in open markets, strong patents and trademarks, and international technical standards has been viewed as a loss of national sovereignty and a weakening of the nation-state system, producing hostile reactions in home countries.
The challenge for policy makers, Vernon argues, is to bridge the quite different regimes of the multinational enterprise and the nation-state. Both have a major role to play, and yet must make basic changes in their practices and policies to accommodate each other.
Vernon argues that the present ostensibly cordial relationships between governments and multinationals disguises serious tensions which need addressing by policy makers… Vernon’s book is an opportune reminder that underlying tensions between the interests of ‘governments’ and multinationals did not disappear in the 1990s, and that much of the enthusiasm for multinational investment in emerging and other economies is either naive, or, at the very least, based on insufficient understanding of the consequences of foreign direct investment.
However, noted MNC expert Raymond Vernon, in the thoughtful and comprehensive In the Hurricane’s Eye actually sees a potential challenge to the ascent of the MNC as the world prepares to enter the new millennium… Vernon does more than simply chronicle the growing hostility toward MNCs across the globe. In the Hurricane’s Eye concludes with a thorough examination of how best to deal with the inevitable conflicts between multinational corporations and various actors within the nation states of the developed world… Vernon, by examining this latest round of hostilities, makes it clear that the nation state must continue to figure into our assessment of the authority of the MNC.
Vernon sees TNCs in the eye of the hurricane, hence a rather gloomy prediction… In short, like any good weatherperson, Vernon has given us the warning signs. But he has done them one better. Unlike the weather, where ‘everyone talks about it but no one does anything about it,’ Vernon’s grand tour does include suggestions on how the hurricane can be avoided.
In the Hurricane’s Eye is the most important book on the political economy of the multinational corporation to be published since Sovereignty at Bay. Ray Vernon has once again demonstrated his insightful and distinctive understanding of the trends affecting the dynamics of business–government relations in the global economy.
At the very moment when market capitalism and the multinational enterprises that both reflect and propagate it are in global ascendancy, this book sounds a timely note of caution. Vernon, whose pathbreaking Sovereignty at Bay offered a fresh perspective on the interactions between multinational firms and national governments a quarter of a century ago, here lays out why their divergent goals make mounting clashes inevitable. One does not have to share Vernon’s pessimism to profit from his analysis of these growing tensions and the steps that might be taken to lessen them.
An invaluable analysis of the role of multinationals in today’s globalizing economy by one of the wisest and most experienced experts in the field.
No one has had deeper insight or a surer grasp into the global economy over several decades than Raymond Vernon. Now with In the Hurricane’s Eye, he explains clearly and logically why the apparent calm between multinational enterprises and the nation-state is likely to be shattered by the inherent conflicts between them. Both practitioners and analysts will benefit from the wisdom and unique perspective he brings to this critical and timely subject.
- 272 pages
- 6 x 9 inches
- Harvard University Press
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