UGF Lecture 9

Management > Global Firm > Issues > Efficiency issues > Distribution issues

2. Distribution issues

Efficient MNE operations results from inputs from the MNE (OAs) and the host country (LAs). The debate is whether the overall benefits are fairly distributed between the two. It is now a major accusation against globalisation, as it is argued to exploit people in poor countries.

The concept of "fairness" is difficult to assess. It depends on what the MNE expects for its intangible assets for which there are rarely an measurable market price. In addition, the host country may support the MNE with various policies which also cannot be priced.

It is generally argued that the MNEs "win", getting the better deal during the negotiations, because:

• The claim a monopoly rent from the OAs
• They are more advanced and so better at bargaining
• The benefit from information asymmetry, knowing more about the host country than it has of their situation