A Bargaining View of Government/mne Relations: The Latin American Case

This article examines the nature of the bargaining relationship between host governments in Latin America and foreign multinational enterprises that operate there. A model of bargaining is constructed to demonstrate the key relationship dimensions of relative resources, relative stakes, and interest similarity between the two parties. This model is then tested with evidence from two surveys of firms and by inspection of national laws and rules. Empirical results show that firms tend to obtain more favorable bargaining outcomes when they have larger-scale operations, when they are less dependent on the country in question, and when they export more; host governments tend to gain more favorable outcomes when the industry is natural resource- based, when the investment matures over time, and when the business is more competitive.