workers in their home countries.
Behrman and Grosse (1990) developed a model that can be used to explain how and where multinational corporations choose to locate. This model uses three variables and is presented in a three-dimensional format rather than in the traditional two-dimensional format. The three variables are: relative power of the government, relative stakes of the company and congruence of interests.
The relative power of the government may be based solely on the fact that it has the ultimate right to declare how the company will conduct business in the host country. It controls access to the host country market, and also to the factors of production within that host country. In some cases, the government not only sets the rules under which the multinational corporation will operate, but also is the chief customer of that operation through state owned enterprises. A government's relative power is also increased if there are a large number of companies vying
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