ABSTRACT
Because international business (IB) involves, by definition, interactions between host country governments and foreign actors, it is the most politicised of all economic disciplines. The chapter’s first section tracks variations over time in the extent to which national governments choose – or are able – to affect the conditions within which cross-border activity takes place. A debate is staged between the idea that recent decades have witnessed “the retreat of the state” (due to factors such as the rising power of the international financial markets; the transfer of sovereignty to bodies of global governance; but also multinational enterprises’ (MNEs’) technology, size and above all mobility advantages) versus the proposition that factors including economic patriotism and the ongoing strength of purely domestic business mean that politicians remain the most powerful players. The second section then reviews a whole panoply of trade, foreign direct investment (FDI) or general policy instruments that governments can use, if they are so minded, to shape IB.
