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Abstract
Dominant models of bargaining between states and multinational corporations (MNCs) have widely held that bargaining relations, especially in high-technology manufacturing, have changed from confrontational to cooperative. It is consequently argued that there is little formal entry bargaining among these actors. However, there are three primary weaknesses in this literature. First, the understanding of outcomes is limited to the terms of investment agreements. This static view ignores the dynamics of bargaining processes and decisions not to invest, which also deserve explanation. Second, it is MNC-centric, ignoring state's privileged role in relation to the governance of entry bargaining in domestic policy-making processes. Third, it views state as a monolithic entity, ignoring the bargaining that occurs inside states. To redress these issues, this article offers a state-centric bargaining model. It identifies administrative and institutional capacity as two critical components of state capacity. It chooses the entry bargaining from 2005, when Hyundai Motors Corporation considered establishing a USD1.5 billion car-manufacturing plant in Turkey. It shows that state capacity in the governance of a domestic policy-making process affects the outcome of entry bargaining: When state capacity is weak, an MNC's decision not to invest is a more likely outcome.
Notes on contributor
Caner Bakir received his PhD in Political Science from Monash University in Melbourne. He is Associate Professor of International Political Economy at Koc University in Istanbul. He is Co-Director of Centre for Globalisation and Democratic Governance. He has published books and articles including Bank Behaviour and Resilience: The Effect of Structures, Institutions and Agents (Palgrave MacMillan, 2013). His research focuses on institutional theory, the varieties of national financial systems, the internationalisation of emerging country multinationals, and regulation and governance.
Notes
The author gratefully acknowledges the Scientific & Technological Research Council of Turkey (TUBITAK) research funding (110K346) which enabled the writing of this paper. Thanks are also due to two referees and the editor of New Political Economy, Lorraine Eden, Jean Boddewyn, Jeffry Frieden, Nuran Acur and Aydin Gunduz for comments on previous drafts of this paper. The most recent version of this paper was presented at the XV World Economy Meeting in Santander in 2013.
1. Czech Invest offered customised incentives to HMC (Bakir Citation2011: 353–5).
2. The Czech state benefited significantly from the EU's regional support programmes with special incentives for investment and job creation which corresponded to 15 per cent of the total HMC investment (Bakir Citation2011: 355).
3. The farming cooperative and six landowners had no interest in selling land requested by HMC. The Czech state's threat of land expropriation over these opponents resolved the conflict and contributed significantly to investment outcome (Bakir Citation2011: 356–8).
4. State industry vision informed the Czech FDI regime and guided the state behaviour (Bakir Citation2011: 351–53).
5. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013 (my emphasis).
6. Figures and information on what HMC officially offered to and requested from the Turkish government are based on an official letter and its annex which were supplied to the author on the condition of anonymity.
7. Interview, the Head of Investment Promotion Agency in Turkey, Istanbul, 29 May 2010.
8. Ministries included Ministries of Finance, Industry and Trade, Transportation, Forests, Energy and Natural Resources. The three bureaucratic agencies were Undersecretariats of Treasury, Foreign Trade and Privatization Board.
9. Interview, the Head of Investment Promotion Agency in Turkey, Istanbul, 29 May 2010.
10. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013.
11. Interview, the Head of Investment Promotion Agency in Turkey, Istanbul, 29 May 2010.
12. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013.
13. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013. Emphases added.
14. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013.
15. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013.
16. Interview, a General Manager of auto-manufacturing firm, Istanbul, 14 July 2009; Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013.
17. Interview, Deputy Director of Incentive Implementation and Foreign Capital General Directorate at Ministry of Economy, Ankara, 5 April 2013. My emphasis.
18. Interview, a General Manager of auto manufacturing firm, Istanbul, 15 July 2009.
19. Interview, Deputy Director of Incentive Implementation and Foreign Capital General Directorate at Ministry of Economy, Ankara, 5 April 2013. My emphasis.
20. Interview, a General Manager of auto manufacturing firm, Istanbul, 15 July 2009.
21. Interview, Former Minister of Industry and Trade, Ankara, 11 April 2013.
22. Interview, Deputy Director of Incentive Implementation and Foreign Capital General Directorate at Ministry of Economy, Ankara, 5 April 2013. My emphasis.
23. Interview, Deputy Director of Incentive Implementation and Foreign Capital General Directorate at Ministry of Economy, Ankara, 5 April 2013. My emphasis.