Why would a business from one country have the power to govern in another land?

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pohnpei397 eNotes educator| Certified Educator

Foreign businesses are not typically given actual official power to govern in any particular country.  However, there are times when multinational corporations can be important enough to a country’s economy that they have effective power to rule at least to some degree.

In many developing countries, the economies are rather weak.  These countries are very dependent on foreign companies to provide jobs and tax revenues.  For this reason, they do not feel that they can antagonize the businesses because the businesses could simply leave the country.  In such instances, it can seem as if the businesses do have the power to govern in the country.  They can often get away with things like breaking laws because the government does not want to make them angry.

Thus, while multinational corporations do not have the official power to rule, they can have de facto power in countries that feel that they absolutely must have the companies’ contributions to the economy.