scholarly journals Foreign direct investment along the Belt and Road: A political economy perspective

2021 ◽  
Author(s):  
Jiatao Li ◽  
Ari Van Assche ◽  
Lee Li ◽  
Gongming Qian
Keyword(s):  
Political Economy ◽  
Host Country ◽  
Bargaining Power ◽  
International Political Economy ◽  
Bargaining Game ◽  
Belt And Road ◽  
Relative Bargaining Power ◽  
Firm Selection ◽  
The Belt And Road ◽  
Selection Of

AbstractIn 2013, China launched its ambitious Belt and Road Initiative (BRI), a large portfolio of infrastructure projects across 71 countries intended to link Eurasian markets by rail and sea. The state-led nature of the Initiative combined with its transformative geopolitical implications have conditioned the type of engagement that many governments and firms in host and third countries are willing to take in Chinese-funded BRI projects. Building on two theoretical streams that have originated in international political economy but have received growing attention in international business, varieties of capitalism and geopolitics, this perspective shows how a greater understanding of the institutional and geopolitical context surrounding BRI helps decipher the selection of host-country firms and third-country MNEs in Chinese-funded BRI projects. We portray firm selection in a BRI project as the outcome of a one-tier bargaining game between China and a host country. We show how institutions and geopolitics influence both the legitimacy gap of Chinese SOEs in a host country and the host country’s relative bargaining power, affecting the likelihood that host firms and third-country MNEs are selected in BRI projects. We also discuss the geopolitical jockeying strategies that these firms can adopt to influence the outcome of the bargaining game.

Testing the bargaining hypothesis in the manufacturing sector in developing countries

1987 ◽  
Vol 41 (4) ◽  
pp. 609-638 ◽  
Author(s):  
Stephen J. Kobrin
Keyword(s):  
Developing Countries ◽  
Host Country ◽  
Bargaining Power ◽  
Manufacturing Sector ◽  
National Study ◽  
Global Integration ◽  
Using Data ◽  
Relative Bargaining Power ◽  
Cross National Study ◽  
Over Time

The bargaining power model of HC–MNC (host country–multinational corporation) interaction conceives of economic nationalism in terms of rational self-interest and assumes both inherent conflict and convergent objectives. In extractive industries, there is strong evidence that outcomes are a function of relative bargaining power and that as power shifts to developing HCs over time, the bargain obsolesces. A cross-national study of the bargaining model, using data from 563 subsidiaries of U.S. manufacturing firms in forty-nine developing countries, indicates that while the bargaining framework is an accurate model of MNC–host country relationships, manufacturing is not characterized by the inherent, structurally based, and secular obsolescence that is found in the natural resource industries. Shifts in bargaining power to HCs may take place when technology is mature and global integration limited. In industries characterized by changing technologies and the spread of global integration, the bargain will obsolesce very slowly and the relative power of MNCs may even increase over time.

Mining Junior, Major Political Risks

2014 ◽  
Vol 1 (1) ◽  
pp. 24-47
Author(s):  
J. Edward Conway
Keyword(s):  
Political Economy ◽  
Strategic Management ◽  
International Business ◽  
Host Country ◽  
International Political Economy ◽  
Stock Exchange ◽  
The United States ◽  
Institutional Distance ◽  
Foreign Firms ◽  
Political Risks

Within the discipline of international business, institution-based theories on strategic management concentrate on how foreign firms conform to their local operating environment. One of the leading theories extending from such research is the idea that a foreign firm’s success in a given country rests on the firm’s ability to “bridge” the institutional (or structural) distance between the firm’s home country and host country, whether that distance be cultural, regulatory, political, cognitive or any given number of possible structural measures. The greater the gap between home and host country, proponents of institutional distance claim, the more challenging it will be for the firm to be successful in the host environment. In this article, we develop the concept of institutional distance through a single qualitative case study of a junior mining firm, Frontier Mining, initially headquartered in the United States and listed on the London Stock Exchange, but with the vast majority of its operations located in Kazakhstan. We approach Frontier and the concept of institutional distance less through the lens of international business and more through the interdisciplinary lens typical of regional studies: how Frontier conforms to the local Kazakh environment is equally telling for those interested in strategic management as it is for those concerned with the intersection of the international political economy and the domestic political economy of a post-Soviet state in transition.

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