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The hyperbolic spread of transnational activity has spawned a spirited debate and the concomitant development of theoretical models that seek to explain their causes and effects.
This study examines why MNCs gravitate toward certain economies and not others. The cause for this is to be found primarily at the state level and governmental policies designed to reduce market risks (i.e., political instability, inadequate infrastructure, and a poor regulatory environment) for prospective investors. Two competing paradigms seek to explain state policies and foreign investment decisions. The neoclassical model is predicated on the self-sufficiency of the market and prescribes a reduced role for the state...
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