ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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MULTINATIONALS-Managing Political Risks

August 1, 1981 MULTINATIONALS Managing Political Risks Arjun Makhijani offered by the US government's Overseas Private investment Corporation, a representative or which was at hand. Once the investment is made, the gov- ernment's power increases automatically because it can confront the corporation with new rules of many kinds besides the risks of nationalisation or expropriation. Franklin Root of the Whanton School advised the participants on these post-entry political risks'. Besides well known devices Such as increasing local liabilities and decreasing local credits, siphoning off capital. etc, in times ,of uncertainty, he urged the executives to make their companies 'indispensable' to the government and to remain so. This indispensability allows a corporation to maintain its 'bargaining leverage' through its "capacity to impose net social costs on the host country in the event of adverse government act lens to the venture", In plain English, the corporation should try to hold the government and the country hostage to its 'bottom-line'.

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