Between the hammer and the anvil: Collaborative states, MNES and development

Most governments continue to attract MNE investment as the optimal means of achieving economic development. However, MNEs have had a patchy record in addressing inequalities. Contemporaneously, the zeitgeist over the last decade has leaned toward greater state interventionism as part of inward-looking domestic policies, where the state is the main actor shaping economic development. We argue that successful developmental outcomes require neither the hollowing out of the state nor heavy-handed interventionism, but rather a collaborative state that strategically coordinates the MNE-state nexus. MNEs do not generate positive development outcomes through market mechanisms alone, just as states cannot always substitute for market actors through direct intervention. Instead, development emerges from a calibrated symbiotic relationship where the state creates location advantages, builds absorptive capacity, and coordinates linkages between MNEs and domestic actors, while managing diverse stakeholder interests and avoiding regulatory capture. We identify two critical prerequisites for effective collaboration: (1) a Weberian technocratic bureaucracy insulated from political volatility, and (2) a developmental consensus among domestic interest groups that prioritizes long-term national upgrading over short-term gains.