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Word Count: 583
FDI Looks Like a Regime But Acts Like The Players Club International management of Foreign Direct Investment FDI can be characterized as an International regime to the extent that attempts are being made to establish regularities among MNCs host countries and home countries But at the same time most of its ability to enforce rules and norms can be circumvented by the powerful actors who are the majority rule makers in an FDI regime For the purposes of this essay a regime is defined as Sets of implicit or explicit principles norms rules and decision-making procedures around which actors expectations converge in a given area of international relations Foreign Direct Investment is characterized as investment by an MNC that extends management rights and controls over affiliate or subsidiary firms in host countries MNCs are most commonly considered to be firms that control productive assets in more than one country Parent firms in the home countries of MNCs acquire their foreign assets by investing in affiliate or subsidiary firms in host countries The MNCs influenced by FDI transactions have engaged in principles such as horizontal integration vertical integration and transfer prices as norms by which to increase their market share reduce transaction costs and monitor the performance of their affiliates The home countries actors and to a larger extent host countries have imposed obligations and performance requirements on MNCs to ensure that their benefits are maximized The UN attempted to establish a Code of Conduct for MNCs called the UN commission on Transnational Corporations Most LDCs supported the draft Code because it focused on MNC behavior and sought to prevent MNC tax evasion restrictive business practices and transfer pricing These were seen as attempts at providing some type of international relation ship among actors The MNCs circumvented the UN code of conduct by influencing their industrial states or home states to delay negotiations until the UN abandoned its effort to establish
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