International Business: The New Realities, 5th Edition

Loss of National Sovereignty

Sovereignty is defined as the ability of a nation to govern its own affairs; normally one country’s laws cannot be applied or enforced in another country. Globalization, however, can threaten national sovereignty in various ways. MNE activities can interfere with a government’s ability to control its own economy, social structure, and political system. Some corporations are bigger than the economies of small nations; Walmart’s internal economy—its total revenues—is larger than the GDP of many of the world’s nations, including Israel, Greece, and Poland. Large multinational firms can apply much pressure on governments through lobbying or campaign contributions and can frequently influence the legislative process. ...