From my point of view we should begin the discussion from the description of international trade. I like the description given in one of the books. Authors are saying that international trade is

“the exchange of products between countries” 1. Although I like this explanation of international trade I think it is not full enough. From my point of view we must change the word products into the word something. Because when we say products we usually think about something that is materially however states can change not only the materially stuff it can also trade in valuables like knowledge ( for example). Also I have to say that for me both states in the person of government and companies are actually the same. Because all in all their main target is their own prosperity.

So let’s go to discuss about the relations between National Governments in multinational enterprises. After I red some articles I came to a conclusion that this relations are always very different but usually they are good if both companies and governments have one common aim. Now it is an era of euphemisms language and some things more likely not to be told. In the same time if we take the book written in 1962 by John S. Ewing and Frank MEISSNER in the preface we can read very interesting thing “American businessmen invest more capital abroad than entrepreneurs of any other country: the U.S government pours great amounts of taxpayers’ money into foreign countries to help friendly nations advance economically and socially, and to strengthen their defenses against the forces of communism”2. Here we can see the situation when there is only one purpose that purse companies and government is to defend themselves against another force.

On the other hand I can show you an example, when because of different purposes the company was destroyed by a state. Everybody in Europe now a days knows about conflict in Russia between oil company YKOS and the Russian government. Of course somebody can say that YKOS actually is not real multinational enterprise however I will not agree with it because though the main % of safety stock was in the hands of Russian citizen there were other keepers from different part of the world including UKSA ( U.K USA). As I already sad everybody know about the conflict and only few know what was happening in reality. In early 90 this company was privatized by Mikhail Hodorkowsky . But the way it was privatized was not really legal.( it is very wide question so I will not discuss it in my work). And of course state helped him to do it. Everything was O.K until Mikhail hasn’t wanted to brake the rules. The thing is that though we do not have such strong legal laws as in Europe and America we’ve got a lot of illegal rules that are necessary to obey. The first one – you should not try to go against authorities the second- you can not change the rules by your own wish. Actually there are 2 versions why everything has started .The firs one is that he wanted to become a President, the second is that he wanted to sell the company to foreign people. And nothing is bad in this deal except one thing. In 1990’s The company was bought for only 6.000.000 but the real price was something about 7.000.000. And this difference was like a debt on the owner and that’s how the state could control him. In the case he sales it the buyers will be we can translate it like conscientious buyers. It means that they buy this company legally and have no responsibility with the state so the government will lose the opportunity to control the company and to get money from it. As a result YKOS is a state’s company now . I think it is very good example what relations between state and company can be and how they can change. Because in the beginning Hodorkowsky was in brilliant relations with the government ,and authorities.

But it is unusual situation, usually relations are different from the relation I have just described.

Now days we can see the increasing of globalization. In Europe there are no borders anymore the political situation is different ,companies are truing to assimilate new countries. And governments can not stay a side . The have got 2 ways. The first one is the way of protectionism. The second one is the way of free trade. Both of them have advantages and disadvantages.

“international trade activity now affects domestic policy more than ever. ….. Governments can not be expected, for the sake of theoretical ideal of “free trade” to sit back and watch the effects of deindustrialization on their countries”3. Some followers of the ”free trade” theory might say that formation of some countries with strong economy today was taken place in the conditions of “free trade market. And this fact will be correct but from my point of view it exact reason why now a days they do not want to apply this practice anymore. As we’ve already decided that there are not so many differences between state and the company, and the main target of a state is to protect itself and be reach, we can make the conclusion that protectionism is an instrument used by state to protect it’s economical safety and helps their own producers. However from the other point of view , protectionism may lead to some problems. I truly believe that company may work only when it compete with the others because then it has to innovate their production, to seek for new marketing ideas e.t.c But in the conditions of protectionism very often they loose every wish to do it. And actually I can understand them. Why do you need to spend your money for innovation if even without it you can have a big profit, people will buy your product anyway. The second problem with protectionism is the more limitation you make the more limitation made against you. ( only in case when the sides are similar in their opportunities). So you are not allowed to export as many products as you wanted to.

On the other hand “free trade” gives the opportunity of wealth competition in market. And sometimes it might be very good for economical condition but bad for security “ more often, economic security and national security were seen as competing with each other”3-1.

So we can see that it is not simple question and not only because there are a lot of types of protectionism but also because it touches not only economical but also political fields. As for me, I think that all this instruments may be used but only after deep researching of situation.

At the end I would like to say that a government has got a huge possibility to control business it has a lot of instruments either to draw multinational enterprises or to push of by giving them either good advantages or bad. However if a state wants to be wealthy and strong it needs business because business means investments into state’s economy. Sometimes some not very strong governments might be under the control of big multinational but anyway, they will be under the control of strong governments. Government and business are inseparable and for the time they exist they will have to compound. But the further economy and world is developing the more difficult will be manage all the problems.

References

1) Business fundamentals John A. Reinecke William F Shhoel 1987 (page 429)

2) International business management John S.Ewing Frank Meiisner 1964 ( page 5)

3) International Business Michael R . Chinkota a 7 th edition (page 698), 3-1 (page 699)

4) Boris Berezovski Kremlin’s god father. Paul Khlebnikov 1999.

5) Internet.

International business

Assessment:

Relations between national governments and multinational enterprises

Student 1521222