ABSTRACT
Political economists and international political economists agree that they increasingly run into trouble when they ignore how economic factors shape international political relations, and how political factors shape international economic relations. This chapter describes this insight to international trade and production. It explains the ways in which transnational corporations (TNCs) influence the economic policies of states and the reasons for claiming a democratic deficit exists in the governance of international trade and finance. TNCs are sometimes referred to as multinational corporations or international corporations. TNCs often possess competitive advantages over firms based in one state resulting from their size, wealth, and level of technical development. States provide incentives to attract TNC direct investment into their economies, but critics say their operations can be damaging in terms of economic, social, and political corruption, disruption, distortion, and exploitation. International financial institutions provide indirect investment in stock markets and loans in bond markets.
