One recent change that has characterized the nature of the relationship between MNCs and the host government is that the MNCs have begun to view the relationship as more cooperative in nature. Central to this shift is economic development outside of the West -- emerging economies today have their own knowledge and experience to contribute to the MNC. The shift towards a two-flow flow of benefits increases the bargaining power of the host nation because it makes its market more attractive. As emerging economies begin to take on more characteristics of fully-developed Western economies, the bargaining power between the MNC and the host government becomes more balanced. Such improvements typically come as the result of economic liberalization, so the propensity of the host government to use its increased bargaining power to extract higher transaction costs is reduced.

Conclusions. The relationship between the MNC and the host government is a key...
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