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Volume 81 – No. 3

Declining Risk and State-Multinational Bargaining: Japanese Automobile Investments in India, Indonesia, and Malaysia

Ali Nizamuddin

DOI: 10.5509/2008813339

  • English Abstract
  • French Abstract

This study examines the bargaining interaction between host countries and multinational corporations over the life cycle of an investment project. During the early phase of an investment in an underdeveloped sector, market risks are high. Most foreign firms are reluctant to enter such an environment without guarantees. In the cases examined here, state protection was extended to automobile joint ventures so as to maximize returns. In this early phase, foreign firms were able to negotiate more favourable terms. However, once production developed, market risks began to decline. Consequently, host economies became attractive to other prospective investors and liberalization led to the influx of new foreign investment activity. The increase in new projects reduced state dependence and enabled host countries to play one MNC against another in order to increase their bargaining power.

Réduction des risques d’investissements, Libéralisation du marché et Négociations commerciales des multinationales d’état: les Investissements de l’industrie automobile japonaise en Inde, en Indonésie et en Malaisie

Cette analyse étudie les échanges de négociations commerciales entre les pays d’accueil et les corporations multinationales sur la durée de vie d’un projet d’investissements. Au cours de la phase initiale d’un investissement dans un secteur sous-développé, les risques de marché sont élevés. La plupart des firmes étrangères sont réticentes à s’engager dans une telle situation sans aucune garantie. Dans les cas ici examinés, la protection de l’état alla jusqu’à la création d’opérations conjointes sur l’industrie automobile afin d’en maximiser les revenus. Dans cette phase initiale, les firmes étrangères furent capapbles de négocier des termes plus avantageux. Néanmoins, dès que la production augmenta, les risques du marché commencèrent à s’affaiblir. En conséquence, d’autres investisseurs éventuels trouvèrent ces économies d’accueil attrayantes, et la libéralisation conduisit ainsi vers un afflux de nouveaux investissements étrangers. La hausse de nouveaux projets réduisit la dépendance à l’état et permit aux pays d’accueil de faire jouer une corporation multinationale contre une autre afin d’augmenter leur pouvoir de négociations.

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An International Review of Asia and the Pacific

School of Public Policy and Global Affairs

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