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*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
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"Towards an Indicative List of FDI Sustainability Characteristics", “The
Importance of Negotiating Good Contracts", "A New Challenge for Emerging
Markets: the Need to Develop an Outward FDI Policy”, "China Moves the G20
toward an International Investment Framework and Investment Facilitation", "The
Rise of Self-judging Essential Security Interest Clauses in IIAs", "Can
Host Countries have Legitimate Expectations?", "The Next Step in
Governance: The Need for Global Micro-regulatory Frameworks", and "The
Evolving International Investment Law and Policy Regime: Ways Forward" *are*
 available at
https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=2461782 and
http://www.works.bepress.com/karl_sauvant/.



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哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看:http://ccsi.columbia.edu/
publications/columbia-fdi-perspectives.
*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 212  November 6, 2017
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Matthew Schroth ([log in to unmask])
*The rise of nationalism,
<https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=02368ac97b&e=5eb397be70>**FDI
<https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=afdacf57b9&e=5eb397be70>**
and the multinational enterprise
<https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=350e84e679&e=5eb397be70>*
* <#m_221715245395256683__edn1>
by
Stephen Kobrin** <#m_221715245395256683__edn2>

Support for (or opposition to) trade and investment policies is typically
seen as reflecting interest group politics in both liberal and
authoritarian states. Displaced workers and competing industries oppose
imports, potential suppliers support inflows of FDI, and competitors oppose
it. The assumption is that individual and group impacts are what matters,
and that outcomes reflect the strength and coherence of a group’s interest,
its ability to articulate its position and political power. Textile tariffs
are a classic example.

Similarly, discussions of economic nationalism typically focuses on
instrumental (if not economically efficient) policies that will extend
state power or protect the domestic economy, such as industrial policy or
domestic control over natural resources. In that context, "nationalism" is
avoided, and “nation” is used as synonymous with “state.” In contrast, some
have argued[1] <#m_221715245395256683__edn1> that, at least in new and
developing countries, policies that do not make economic sense provide
“psychic satisfaction;” a nationalist economic policy could have symbolic
value, reinforcing, and perhaps creating, national culture and identity.

Given the rise of populist nationalism in advanced economies, the time has
come to take a broader look at nationalism and its possible impacts on the
multinational enterprise (MNE).

A nation is a socio-cultural concept, an imagined political community whose
culture is shaped by collective historical experience or collective myth.
“Nationalism” implies that “nation” and “state” should be territorially
congruent, and any violation of that principle is seen as deeply offensive.
Critically, nationalism and national identity require “others” who are not
recognized as belonging.[2] <#m_221715245395256683__edn2>

To the extent that economic policy reflects an ideologically driven
nationalism focused on culture and identity, it represents a significant
shift away from interest group politics toward a more ill-defined,
amorphous focus on the nation as a whole: from a concern with the
individual to the collectivity. In that context, international transactions
and international actors may be considered an existential risk to the
nation and its culture.

Thus, President Trump called for protecting the US  “from the ravages of
other countries making our products, stealing our companies, and destroying
our jobs.”[3] <#m_221715245395256683__edn3> Theresa May argued that the UK
voted to leave the EU to “become a fully independent sovereign country.”[4]
<#m_221715245395256683__edn4> She also lashed out against multiculturalism,
against citizens of nowhere.  The implied threat is to the nation as a
whole rather than to individual groups.

Ideologically-driven economic nationalism is not new. CNOOC’s 2005 bid to
take over Unocal, a minor US oil firm, failed when Chevron exploited
growing Chinese power to generate nationalist opposition to the bid in the
public and Congress. Dubai-based DP World dropped its bid to take over
terminal operations in six US ports as a result of strong opposition in
Congress to an “Arab” takeover. One certainly could add the outrage over a
Japanese firm’s purchase of Rockefeller Center in the 1980s to the list.

In this climate, policy toward MNEs and FDI will be much less predictable,
uncertainty will be increased and “economically rational” arguments will
have less traction. Equally important, as one moves away from interest
group politics toward “threats” to the nation (“the ravages of other
countries”), it becomes more difficult to influence policy formation. How
do you respond to a charge that a MNE or FDI is a threat to national
culture or identity? What do you do when job losses from outsourcing or
outward FDI are seen as an affront to the nation as a whole, rather than a
problem for the affected workers, or inward FDI is seen as a threat to a
country’s culture?

Suspicion of foreigners alone might suffice to raise security concerns
about inward FDI. Supply chains may be at risk, despite arguments that
consumers will suffer increased prices and lower quality as a result.
Nationalism could well impose restraints on the ability of MNEs to transfer
managers and needed skills and generate a reaction against foreign brands.

MNEs have to understand that the populist opposition to globalization,
regardless of how it is expressed, is based on legitimate grievances that
must be addressed. Firms should support policies that deal with the
distributional effects of trade and investment, policies that go beyond
paying lip service to generalized worker retraining. Nationalist reactions
should also be given serious consideration in outsourcing and investment
decisions; they can no longer be dismissed as economically ill-informed and
should be considered as potential costs to the firm. At this point,
investors cannot expect traditional responses to carry the day.

------------------------------
* <#m_221715245395256683__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters.* *Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
series.*
** <#m_221715245395256683__ednref2> Stephen Kobrin ([log in to unmask]) is
William Wurster Emeritus Professor of Multinational Management, The Wharton
School, University of Pennsylvania. The author is grateful to Lou Wells for
his comments and Yair Aharoni, Jean Boddewyn and José de la Torre for their
helpful peer reviews.
[1] <#m_221715245395256683__ednref1>* See *Harry Johnson, “A theoretical
model of economic nationalism in new and developing states,” *Political
Science Quarterly*, vol. 80 (June 1965), pp. 169-185.
[2] <#m_221715245395256683__ednref2> *See* Benedict Anderson*, Imagined
Communities: Reflections on the Origin and Spread of Nationalism* (New
York: Verso, 2016); *see also* Ernest Gelner, *Nations and Nationalism*
(Oxford: Blackwell, 2006).
[3] <#m_221715245395256683__ednref3> “Inaugural address: Trump’s full
speech,” *CNN Politics*, Jan. 21, 2017,
http://www.cnn.com/2017/01/20/politics/trump-inaugural-address/.
[4] <#m_221715245395256683__ednref4> *See* Stephen Castle, “‘Brexit’ talks
will start by end of March, Teresa May says,” *New York Times, *Oct. 2,
2016, http://www.nytimes.com/2016/10/03/world/europe/brexit-
talks-march-tresa-may-britian.html?_r=0
<https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=566fe85373&e=5eb397be70>;
Amanda Taub, “Behind 2016’s turmoil, a crisis of white identity,” *New York
Times*, http://www.nytimes.com/2016/11/02/world/americas/brexit-
donald-trump-whites.html?ref=world&_r=0.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Stephen Kobrin, ‘The rise of nationalism, **FDI**
and the multinational enterprise,’ Columbia FDI Perspectives, No. 212,
November 6, 2017. Reprinted with permission from the Columbia Center on
Sustainable Investment (**www.ccsi.columbia.edu
<http://www.ccsi.columbia.edu>**).” A copy should kindly be sent to the
Columbia Center on Sustainable Investment at **[log in to unmask]*
<[log in to unmask]>*. *

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Matthew Schroth, [log in to unmask]

   - No. 211, Mélida Hodgson, “NAFTA 2.0:  a way forward for the investment
   chapter,” October 23, 2017.
   - No. 210, Karl P. Sauvant, “The importance of negotiating good
   contracts,” October 9, 2017.
   - No. 209, Catharine Titi, “A stronger role for the European Parliament
   in the design of the EU’s investment policy as a legitimacy safeguard,”
   September 25, 207.
   - No. 208, Lisa Sachs, Jeffrey Sachs and Nathan Lobel, “Corporations
   need to look beyond profits,” September 11, 2017.
   - No. 207, Lilac Nachum, “How much social responsibility should firms
   assume and of which kind? Firms, Governments and NGOs as Alternative
   Providers of Social Services,” August 28, 2017.

*All previous FDI Perspectives are available at *http://ccsi.columbia.edu/
publications/columbia-fdi- perspectives/

*Other relevant CCSI news and announcements*

   - CCSI is announcing a *Call for Papers* for the edition of the *Yearbook
   on International Investment Law and Policy
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*covering
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   2018. *Please see details here
   <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=148956b8d8&e=5eb397be70>.*

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