Reference no: EM132998122

Should Countries Limit Foreign Control of Key Industries?

Read the following point and counterpoint carefully. In light of your understanding of the reading materials for the course, especially chapter 15, what point of view would you agree with and why? Please explain. It is expected that your explanation will include evidence of adequate and appropriate background reading. You must also provide evidence for the argument you are making, by citing publications in the field (i.e. from the textbook). Citation includes summarizing what you have read or directly quoting an appropriate extract from a source. Whether you summarize or quote, you must acknowledge the source, by providing the author's name and the publication details - both in your text and also in a list of References, or Bibliography, at the end of your comments.

POINT: Countries should limit foreign control of key industries in order to protect their economic and security interests, especially in key industries such as transportation, mass media, and energy. History has shown that home governments have used powerful foreign companies to influence policies in the countries where they operate, and that foreign companies have used their home governments as instruments to improve their interests in a country. Whenever a company is controlled from abroad, decisions about that company can be made abroad, possibly to the detriment of the host country.

COUNTERPOINT: Decisions made by foreign companies are not likely to be much different than decisions made by local companies. MNEs staff their foreign subsidiaries mainly with nationals of the countries where they operate, and make decisions based on a good deal of local advice. Their decisions have to adhere to local laws and consider the views of suppliers and customers. Protection of certain industries from foreign control could reduce competitiveness in those industries and harm, rather than help, the local people. Those who argue for limits are relying on the outdated dependencia theory, which holds that emerging economies have practically no power in their dealings with MNEs. More recent bargaining school theory states that the terms for a foreign investor's operations depend on how much the investor and host country need the other's assets. Countries and foreign companies need each other, and both will lose if limitations are placed on foreign control.