Strange: States, Firms and Diplomacy

In States, Firms, and Diplomacy Susan Strange argues that multinational corporations are increasingly important in global political economy, in fact, they force states to adopt new forms of diplomacy. Recent changes in world politics internationalizing production allowed firms to take this new role in the international arena. Firms can now relocate their production because of technological development and cheaper transportation and communication costs. Firms can choose where to produce, and, as it is in the interest of states to attract multinational corporations, they gain political power. States do not only compete with other states for relative power, but also for market share. For this reason they must bargain with multinational corporations and convince them to locate their production in the state. Multinational corporations are likely to gain even more influence in the global economic system in the future.