Safeguarding or international morality? The behavior of multinational corporations in less developed countries, 1975–86

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Abstract
Recent research has evaluated multinational corporation (MNC) behavior in terms of how MNCs affect domestic politics in less developed countries (LDCs). Building on this body of literature, we examine two quite different models concerning whether the foreign direct investment (FD1) behavior of MNCs: (1) safeguards investments by locating FDI in LDCs that utilize a high degree of repression while concurrently implementing few human rights reforms, or (2) promotes a less conflictual international morality stance whereby higher levels of FDI flow to LDCs that are less repressive and more reformist. This analysis evaluates the FDI behavior of MNCs based in: (1) the Development Assistance Committee countries, (2) the United States, and (3) Japan, for the overall set of 108 LDCs and by region for the 1975–86 period. Although the findings vary dependent on the class of MNC and region evaluated, they indicate strong support for the international morality model. In brief, it does not appear that MNCs view the lack of human rights reforms and the high use of repression in LDCs as acceptable responses to domestic conflict. The main implication of the study is that the resolution of domestic conflict by the use of repression and lack of reform may retard the ability of LDCs to promote economic growth and development via the inflow of FDI developmental capital.

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