Accommodating multinationals in federal political systems
Institutions affect policies, and policies affect multinational operations.
I assert that political factors have a marked influence on these decisions: governments that can commit to future economic policies conducive to multinationals' interests will achieve higher levels of FDI inflows.
Elected politicians can no longer manipulate monetary policy, but monetary policy does remain responsive to changing economic conditions.
The main thesis of this book centers not only on the fact that political institutions that provide credibility are valuable to multinationals, but also that these institutions must be analyzed within a dynamic context.
Strong economic performance necessitates policy change in a world of dynamic political and economic conditions.
In the global economy, governments must make adjustments to economic policies according to the domestic economic situation (monetary and fiscal policy) and negotiate with other nation-states on the terms of international economic agreements (bilateral treaties, monetary cooperation, work within international organizations, etc.).
Conventional wisdom holds that nations woo multinationals by lowering taxation levels.