The obsolescing 'bargaining model'? MNC-host developing country relations revisited

The traditional bargaining model of MNC-host developing country relations h as become obsolete. Today, those relations are better understood as the res ult of a two-tier, multi-party bargaining process. Tier-1 bargaining, betwe en the governments of host and home countries, occurs bilaterally or throug h multilateral institutions. It produces macro rules on FDI that affect mic ro negotiations in Tier-2 (per the traditional bargaining model). The exten t of FDI liberalization resulting from Tier-1 bargaining varies predictably across home-host country pairs and industries, Suggestions for testing the two-tier bargaining model are also presented.