MNEs are engaged in strategies to maximize their profits. Unless bound by law, they usually do not care much about altruism. On the other hand, governments are not engaged in business for profits. How to insert more domestic actors and upgrade the existing ones along VCs to capture more value, enhance gains, and establish further linkages for a more inclusive growth are some of the important issues for the host governments.
Both the MNEs and host governments have complementary roles to play. For instance, the MNEs need the governments to offer L advantages like a functioning legal environment and policy support, in addition to building infrastructure and a national innovation system. Governments also need MNEs to help spur growth, employment, income, and support other important developmental agenda. MNEs do keep track of government policies including the national priorities of the host countries while pursuing their business strategies. On the other hand, government policies should also take into account the business interests of the MNEs, allowing them adequate space to be able to operate profitably. What will be the impact of a particular government policy on the MNEs’ business interests? Will the MNEs be adversely affected to such an extent that they might move away from this country to another? These types of sensitivity analysis should be done before launching a new policy or revising the existing ones.
Governments need to prudently formulate appropriate policies to mitigate some of the adverse effects that the MNE strategies may have on their national economies or societies or environment. It is up to governments to come forward to address the questionable parts of the MNEs’ strategies, and provide coherent and consistent regulation to underline the public and welfare interests of the state, while maintaining an optimal environment for the MNEs to achieve sufficient returns.