Multinational corporations and dependency 85 their political'will''to do so;second,the possible economic distortions produced by the investors in the local economy.Bargaining capability means little if it is not (or cannot be)exercised for political reasons.15 Greater"benefits''are of limited value if they lead to a"perversion''of the structure of the local economy.The final section of this essay will address the question of political constraints on the exercise of national will.The following section will address the question of economic distor- tions produced by foreign investment. I Dependencia proposition II Multinational corporations create distortions within the local economy.There are innumerable allegations of distortion,but four appear to occupy positions of preeminence in the dependencia literature:first,that multinational corporations "preempt''the development of an indigenous economic base by squeezing out local entrepreneurs in the most''dynamic''sectors of the host country economy;second, that multinational corporations employ "inappropriate capital-intensive tech- nologies when they move in,adding to host country unemployment;third,that multinational corporations worsen the distribution of income in the host country or even produce an absolute loss for the lower 40 percent;fourth,that multinational corporations alter consumer tastes and undermine the culture of the host country. Where might a dialogue between dependentistas and non-dependentistas begin with each of these propositions? 1.Multinational corporations "preempt''the development of an indigenous economic base by squeezing out local entrepreneurs in the most''dynamic''sectors of the host country economy. The analysis of direct investment as a response to foreign opportunities in imperfect markets,introduced in Section I,can be a powerful tool for analyzing the question of"preemption''or of foreign industrial domination.The work of Hymer, Kindleberger,Vernon,et al.,suggests that multinational corporations will concen- trate their activities in industries,or at stages within industries,where the greatest barriers to the entry of competition are located-that is,where there are the greatest scale factors,the highest amounts of R D,the largest advertising efforts,and so forth.16 By common definition,therefore,they are likely to be found in those sectors considered by the host country as most "'dynamic''or most glamorous.At the moment when the multinational first comes into the host country,however,domes- have tried to use this distinction to define "exploitation"and"complicity in exploitation'within the balance of power framework suggested here,and to measure the cost of such exploitation quantita- tively in'The Theory of Interational Exploitation in Large Natural Resource Investments,'in Stephen J.Rosen and James R.Kurth,eds.,Testing Theories of Economic Imperialism (Lexington:Lexington Books,1974). Certainly multinational corporations appear to locate their activities in industries that are highly concentrated.Fernando Fajnzylber and Trinidad Martinez Tarrago have found that in Mexico in 1970,Multinational corporations and dependency 85 their political "will" to do so; second, the possible economic distortions produced by the investors in the local economy. Bargaining capability means little if it is not (or cannot be) exercised for political reasons.15 Greater "benefits" are of limited value if they lead to a "perversion" of the structure of the local economy. The final section of this essay will address the question of political constraints on the exercise of national will. The following section will address the question of economic distor￾tions produced by foreign investment. Dependencia proposition II Multinational corporations create distortions within the local economy. There are innumerable allegations of distortion, but four appear to occupy positions of preeminence in the dependencia literature: first, that multinational corporations "preempt" the development of an indigenous economic base by squeezing out local entrepreneurs in the most "dynamic" sectors of the host country economy; second, that multinational corporations employ "inappropriate" capital-intensive tech￾nologies when they move in, adding to host country unemployment; third, that multinational corporations worsen the distribution of income in the host country or even produce an absolute loss for the lower 40 percent; fourth, that multinational corporations alter consumer tastes and undermine the culture of the host country. Where might a dialogue between dependentistas and non-dependentistas begin with each of these propositions? 1. Multinational corporations "preempt" the development of an indigenous economic base by squeezing out local entrepreneurs in the most "dynamic" sectors of the host country economy. The analysis of direct investment as a response to foreign opportunities in imperfect markets, introduced in Section I, can be a powerful tool for analyzing the question of'' preemption'' or of foreign industrial domination. The work of Hymer, Kindleberger, Vernon, et al., suggests that multinational corporations will concen￾trate their activities in industries, or at stages within industries, where the greatest barriers to the entry of competition are located—that is, where there are the greatest scale factors, the highest amounts of R & D, the largest advertising efforts, and so forth.16 By common definition, therefore, they are likely to be found in those sectors considered by the host country as most "dynamic" or most glamorous. At the moment when the multinational first comes into the host country, however, domes- 15I have tried to use this distinction to define "exploitation" and "complicity in exploitation" within the balance of power framework suggested here, and to measure the cost of such exploitation quantita￾tively in "The Theory of International Exploitation in Large Natural Resource Investments," in Stephen ]. Rosen and James R. Kurth, eds., Testing Theories of Economic Imperialism (Lexington: Lexington Books, 1974). "Certainly multinational corporations appear to locate their activities in industries that are highly concentrated. Fernando Fajnzylber and Trinidad Martinez Tarrago have found that in Mexico in 1970