ABSTRACT
Tip O’Neill, a former Speaker of the U.S. House of Representatives, once said, “All politics is local.” He might have said the same thing about economic production. For no matter how “globalized” the world economy becomes, economic production will always be based in local communities and will always employ resources drawn from those communities. Multinational Corporations (MNCs) do not alter this basic reality. MNCs do alter the nature of economic decision making, however. Historically, decisions about production have been made by local business owners with reference to local conditions. When MNCs are involved, however, foreign managers make production decisions with reference to global conditions. Yet, whereas the frame of reference for much economic decision making has shifted, the frame of reference for political decision making has not. Governments continue to address local concerns in response to the demands of local interest groups. As one prominent scholar of MNCs has written, “the regime of nation states is built on the principle that the people in any national jurisdiction have a right to try to maximize their well-being, as they define it, within that jurisdiction. The MNC, on the other hand, is bent on maximizing the well-being of its stakeholders from global operations, without accepting any responsibility for the consequences of its actions in individual national jurisdictions” (Vernon 1998, 28).
