xin has gotten back all her essays, and quite happy because xin expected to fail her last 2 essays :)
xin didn't do brilliantly either - but xin is easily contented.

Now for exams - let's discuss whether the mercantilist (oooh don't we love mercantilism) view that TNCs are detrimental to home countries ring true.

Background
Transnational Corporations: A corporation that owns, controls and manages its assets in more than one country.
Mercantilists say: TNCs are bad for the home country due to outflow of money in terms of FDI to host country, and in view that mercantilists think wealth = power, shall we also argue that, ultimately, what mercantilists fear is that power (in other forms as well) will flow from home to host?

Money Matters
Yes, outflow of money in FDI - less money in home country for developing local industries, promoting economic growth... money which could have been used at home used to develop infrastructure, industries in host country
But money usually generated in the developing countries, and not taken out of home country - problem long pre-empted by Johnson Administration in the 1960s whose discouragement of capital outflow prompted TNCs to raise Eurodollars issues in London to pay for expenses rather than take money out of Wall Street.

Yes still, because state revenue threatened because of sophisticated accountants help TNCs cheat state of money, because difficult to ascertain the profits made within the country, and cannot tax money generated outside home country e.g. profits of oil companies and banks in 70s and 80s – the importance of these companies in bringing fuel and credit forced politicians to not question this preferential tax treatment; also, California tried with its unitary tax laws (tax worldwide profits) but ended with TNCs fleeing the country
Anyway, profits are usually repatriated (though part of it will be used to finance further development of the TNC)
Counterfactual - If TNCs don't use this money for investing in Host Country A, will they necessarily use this money to invest in (assuming TNCs were rational and picked A for its economic benefits) Home Country B and face higher costs of e.g. wages, raw materials, taxes... Will B's TNCs necessarily survive if they choose to keep investment home (and develop local industries blahblahblah) because they might face competition from A's TNCs in B (and which has the advantage of having economies of scale)

Other Forms of Outflow of Power
Technological Transfer – Technological knowledge and managerial know-how ‘exported’ to host country, allowing them to benefit and improve relative to home, relative gain in power by the host threatens home’s position in the hierarchy of power e.g. how the predominance of US position in the global economy was threatened by emergence of European and Japanese TNCs

Extent debatable – home governments not totally at a loss e.g. US Congress urge TNCs to keep their R&D at home, preserving not only skilled jobs domestically, but also its competitive edge in superior knowledge; managerial know-how preserved through employment of home managers even in host countries (high-end jobs preserved as well as managerial skills) e.g. Japanese corporations have a tendency – trust in compatriots, also business culture difficult to export – an implicit method of doing business inherent in culture; exploitation argument (quite Marxist to be honest)– TNCs only develop specific, mechanized stage of production in one particular area so workers are only capable of a standard, repetitive work, without gaining any useful skills applicable to even similar local industries

All down to bargaining power of host, home and TNCs – who has what other people need, formation of cartel (only successful, but very successful in Organization of the Petroleum Exporting Countries) to threaten TNCs with withdrawal of scarce resources (FUEL) – using supply and demand to successfully demand higher prices e.g. 1973 oil embargo – TNCs forced to come home; also, once TNC is settled, built infrastructure – nature of FDI such that it is more costly to simply uproot and go – bargaining power of host increases à home is more threatened

Compare bargaining power of hosts like Asia VS hosts like Africa

General Loss of Political Power

Social impacts: Loss of jobs (duh!) Low-skilled jobs mainly cos R&D generally kept home, as are managerial positions

Environmental blame-game: when a Swiss chemical company inadvertently spilt toxic waste into the Rhine, it was the Swiss government to whom the French, German and Dutch governments complained; but also dependent on power of home country e.g. Canada can’t do anything to stop US for allowing its industries to generate acid rain which falls on Candadian forests

Home, if no power (as in to bargain, to threaten, to set policies that will be followed), open to exploitation by TNCs – TNCs are like big bullies, they bully who they can. But we can’t blame them, after all, the state-power-struggle is none of their business, their sole aim is profit-maximization =)

TNCs can help states too in cunning, political manoeuvres because of their immense resources.