The role of MNCs in China and Brazil’s foreign policy towards developing states in Africa

Tukic, Nusa (2018-03)

Thesis (PhD)--Stellenbosch University, 2018.

Thesis

ENGLISH ABSTRACT: While most international political economy (IPE) literature has been concerned with the relations between multinational corporations (MNCs) and the host states in which they operate, this study sought to contribute to general state-MNC relations by looking at the other dimension, namely home state-MNC relations. In addition, while home state-MNC literature mostly focuses on how this relationship plays out in the domestic realm; this study focused on home state-MNC relations in foreign policy. A further limitation was to only look at home state-MNC relations in the developing world by using China and Brazil as the main case studies, and their interaction with MNCs in foreign policy towards developing states from Africa. The research design was comparative, using the most similar system case selections. The cases (China and Brazil) were selected based on several similarity indicators: a history of a strong state apparatus and a history of dirigisme in relation to the economy. This implies the pivotal role of the state not only in domestic but also international relations, particularly regarding MNCs internationalisation. In addition, China and Brazil’s similarities in other respects: emerging power status, internationalisation of MNCs and economic expansion from 1990 onwards (particularly in Africa), move towards capitalist economy and aspects of late industrialisation; provided for interesting contextualisations. Given China and Brazil’s history of state control over all aspect of society, politics and economics, this study wanted to investigate how the home state interacts with its MNCs in foreign policy, based on the assumption that globalisation forces have caused the state’s role to decline as outlined by Stopford and Strange (1991). This was done through the application of the theoretical framework derived from (mainly) the works of Strange (1988, 1996) and Weiss (1998), which stipulates that the locus of power in home state-MNC relations is dependent on the control of four pillars of structural power (credit, security, production, and knowledge). In other words, whoever controls majority of the pillars has the leverage to ask certain favours from the other. This extends to the attribution of specific roles to MNCs by their home state in its foreign policy. In the case of equal control of the pillars, it is argued that the relationship will be one of governed interdependence. Based on China’s political and institutional background of being a communist state, it was expected that the locus of control, despite the forces of globalisation and increasing move towards open market principles, will remain in the hands of the home state. For Brazil, the assumption was that the home state-MNC relationship will be one of interdependence, based on the history of protectionism. However, the findings of this study are counterintuitive, as it was found that in the case of China, the home state-MNC relationship is one of conditioned governed interdependence; and in the case of Brazil, it is one of dependence of MNCs on the home state. In relation to roles attributed to MNCs in the home states foreign policy, it was found that the types of roles in the case of China and Brazil are the same: national champion, wealth creator, market access pioneer, and positive image creator through the performance of South-South Development Cooperation activities. In the case of China, it was found that the home state can attach a certain role to its MNCs which is furthermore dependent on five indicators of MNC importance: time, sector, region, events around region, and MNC ownership structure. However, based on the MNCs control of two of the four pillars of structural power (production and knowledge) they have operational flexibility in deciding if they want to adhere to the attributed role, therefore the home state- MNC relation is one of conditioned governed interdependence. In the case of Brazil, it was found that the role attributed to MNCs by their home state depends on one indicator: the political or economic importance of the region/country of MNCs operation for Brazil’s foreign policy. In addition, based on the dependence of MNCs on their home state, Brazilian MNCs are more likely to adhere to that role than their Chinese counterparts, indicating that they have limited operational flexibility as their relationship towards the home state is one of dependence.

AFRIKAANSE OPSOMMING: Terwyl die meeste internasionale politieke ekonomie (IPE) literatuur oor die verhoudinge tussen multinasionale korporasies (MNKs) handel en die gasheerstaat waarbinne hulle funksioneer, beoog hierdie studie om ’n bydrae te lewer tot algemene staat-MNK verhoudinge deur te fokus op ’n ander dimensie, naamlik tuis staat-MNK verhoudinge. Terwyl tuis staat-MNK literatuur meestal fokus op hoe hierdie verhoudinge uitspeel op plaaslike vlak, fokus hierdie studie aanvullend op tuis staat-MNK verhoudinge in buitelandse beleid. ’n Verdere beperking was om net te kyk na tuis staat-MNK verhoudinge in die ontwikkelende wêreld deur gebruik te maak van Sjina en Brasilië as die hoof gevallestudies, en hierdie state se interaksie met MNKs in die buitelandse beleid teenoor ontwikkelende state van Afrika. Die navorsingsontwerp is vergelykend en die mees gelyksoortige gevalle is gekies. Die gevalle (Sjina en Brasilië) is gekies gebaseer op vele ooreenkomstige indikatore: ’n geskiedenis van sterk staataparatuur en ’n geskiedenis van dirigisme in verhouding tot die ekonomie. Dit impliseer die deurslaggewende rol van die staat, nie net in die plaaslike-, maar ook in die internasionale verhoudinge, met spesifieke verwysing na MNKs se internasionalisering. Sjina en Brasilië se ooreenkomste in ander aspekte: ontluikende magstatus, internasionalisering van MNKs en ekonomiese uitbreiding van 1990 en vorentoe (veral in Afrika), beweging na kapitalistiese ekonomie en aspekte van laat industrialisering. Hierdie aspekte het gelei tot interessante kontekstualisering. Gegewe Sjina en Brasilië se geskiedenis van staatsbeheer oor alle aspekte van die samelewing, politiek en ekonomie, wil die studie die interaksie tussen die tuis staat en die MKN in buitelandse beleid ondersoek, gebaseer op die aanname dat globaliseringsmagte tot gevolg gehad het dat die staat se rol, soos uiteengesit deur Stopford en Strange (1991) afneem. Dit is gedoen deur die toepassing van die teoretiese raamwerk afgelei van (meestal) die werk van Strange (1988, 1996) en Weiss (1998) wat stipuleer dat die lokus van mag in die tuis staat-MNK verhoudinge afhanklik is van die beheer van die vier pilare van strukturele mag (krediet, sekuriteit, produksie en kennis). Met ander woorde, wie ook al die meerderheid van die pilare beheer, het die opperhand om sekere gunste van die ander te vra. Dit brei uit tot die toerekening van rol tot MNKs namens hulle tuis state in buitelandse beleid. In die geval van gelyke beheer van die pilare, word daar geargumenteer dat die verhouding een van regerende interafhanklikheid sal wees. Gebaseer op Sjina se politieke en institusionele agtergrond van ’n kommunistiese staat, was dit te wagte dat die lokus van beheer, ten spyte van die magte van globalisering en ’n toenemende skuif na opemarkbeginsels in die hande van die tuis staat sal bly. Vir Brasilië was die aanname dat die tuis staat-MNK verhouding een van interafhanklikheid, gebaseer op ’n geskiedenis van proteksionisme sal wees. Tog is die bevindinge van hierdie studie inteendeel anders, omdat daar gevind is dat, in die geval van Sjina, die tuis staat-MNK verhouding een van gekondisioneerde regerende interafhanklikheid is, en in die geval van Brasilië dit een van die afhanklikheid van MNKs op die tuis staat is. Met betrekking tot die rol toegeskryf aan MNKs tuis staat buitelandse beleid, is daar gevind dat die tipe van rol in geval van Sjina en Brazilië dieselfde is: nasionale kampioen, rykdomskepper, pionier tot marktoegang, en positiewe beeldskepper, deur die prestasie van Suid-Suid Samewerkende Ontwikkelingsaktiwiteite. In die geval van Sjina is daar gevind dat die tuis staat ’n sekere rol kan toeskryf aan die MNKs wat verder afhanklik is van vyf indikatore van die belangrikheid van MNKs: tyd, sektor, area, gebeurtenis in die area en MNK eienaarskapstruktuur. Tog, gebaseer op die MNKs se beheer van twee van die vier pilare van strukturele mag (produksie en kennis), het hulle operasionele buigsaamheid om te besluit of daar gehoor gegee gaan word aan die toegediende rol. Gevolglik is die tuis staat MNK verhouding een van gekondisioneerde regerende interafhanklikheid. In die geval van Brasilië is daar gevind dat die rol toegestaan aan MNKs deur die tuis staat afhanklik is van een indikator: die politieke of ekonomiese belangrikheid van die area/land van die MNK se operasie vir Brasilië se buitelandse beleid. Verder, gebaseer op die afhanklikhied van MNKs op die tuis staat, is Brasiliaanse MNKs meer geneig om te voldoen aan die rol toegestaan as hulle Sjinese eweknieë. Dit dui op beperkte operasionele buigsaamheid as gevolg van die verhouding tot die tuis staat een van afhanklikheid is.

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