84 International Organization from an investment over the life of the project.They can be used at the micro level to analyze any particular investment agreement,or at the macro level to analyze the direction of changes in North-South (center-periphery)economic relations.They have received some important initial testing,but much more is needed. The balance of bargaining power framework provides some important contrasts to,and amplifications of,the dependencia perspective.First,it ignores the capitalism-socialism dichotomy that is central to many dependency writers.It fo- cuses on the relative negotiating strength of the individual actors rather than on the way in which property is owned within the economic system.It suggests that scarce resources and optimizing behavior would produce the same outcome whether the "investor''were a private capitalist or a socialist state agency:that a Soviet co- production agreement for bauxite in Guinea (e.g.,Dembe)or a Roumanian pet- rochemical project in Latin America should not differ from an American co- production agreement for oil in Indonesia or a German petrochemical project in Africa unless the Soviet or Roumanian governments wanted to use the state agencies involved as aid-giving institutions (i.e.,direct them to refrain from optimizing behavior in the use of their scarce resources).Second,it suggests that the increasing spread of multinational corporations of diverse national origins (American,Euro- pean,Japanese)strengthens,rather than weakens,the position of Third World countries because it gives them more alternatives to choose from.Third,it offers hope to the periphery that the direction of change is in their favor:if one projects a world in which the competition among foreign investors is increasing,in which the growth of the Third World is continuing (irrespective of a rising or falling gap in relation to the developed countries),and in which the breadth of host country industrial capacity and the negotiating skills of host country bureaucrats are expand- ing,for example,one would predict that host countries would have to pay less for the services of foreign investors in the future than they have had to in the past.3 There would still be large numbers of cases where the distribution of the benefits was highly tilted toward the foreign company in accordance with the variables specified earlier (e.g.,in the poorest countries,and/or at the beginning of most investment agreements,and/or in those industries where technology was rapidly changing).But one would expect the benefits from foreign investment in the aggre- gate to be rising and the cost of securing those benefits to be falling,over time.14 There are two severe limitations to this balance of power framework,however, to which dependencia analysis should draw the attention of non-dependentistas: first,the possible separation between the potential capability of host goverments to exercise greater negotiating strength in their relations with foreign investors anc The transfer of bargaining power into Third World hands would be retarded,however,to the extent that host countries compete among themselves to get foreign investment. 14Some companies,of course,may try to balance their increasing vulnerability in certain product lines with more profitable operations in other lines where they have tighter control over technology.Peter Evans hypothesizes,for example,that American petrochemical companies in Brazil are trading "unat- tractive"arrangements for the production of chlorine for a profitable "'kicker''in polyurethane foam (TDI).Testing the New Alliance:The Brazilian State,the Multinationals and the Launching of the Polo Petroquimico at Camacari,Bahia,"Brown University,xerox,February 1976.84 International Organization from an investment over the life of the project. They can be used at the micro level to analyze any particular investment agreement, or at the macro level to analyze the direction of changes in North-South (center-periphery) economic relations. They have received some important initial testing, but much more is needed. The balance of bargaining power framework provides some important contrasts to, and amplifications of, the dependencia perspective. First, it ignores the capitalism-socialism dichotomy that is central to many dependency writers. It fo￾cuses on the relative negotiating strength of the individual actors rather than on the way in which property is owned within the economic system. It suggests that scarce resources and optimizing behavior would produce the same outcome whether the "investor" were a private capitalist or a socialist state agency: that a Soviet co￾production agreement for bauxite in Guinea (e.g., Dembe) or a Roumanian pet￾rochemical project in Latin America should not differ from an American co￾production agreement for oil in Indonesia or a German petrochemical project in Africa unless the Soviet or Roumanian governments wanted to use the state agencies involved as aid-giving institutions (i.e., direct them to refrain from optimizing behavior in the use of their scarce resources). Second, it suggests that the increasing spread of multinational corporations of diverse national origins (American, Euro￾pean, Japanese) strengthens, rather than weakens, the position of Third World countries because it gives them more alternatives to choose from. Third, it offers hope to the periphery that the direction of change is in their favor: if one projects a world in which the competition among foreign investors is increasing, in which the growth of the Third World is continuing (irrespective of a rising or falling gap in relation to the developed countries), and in which the breadth of host country industrial capacity and the negotiating skills of host country bureaucrats are expand￾ing, for example, one would predict that host countries would have to pay less for the services of foreign investors in the future than they have had to in the past.13 There would still be large numbers of cases where the distribution of the benefits was highly tilted toward the foreign company in accordance with the variables specified earlier (e.g., in the poorest countries, and/or at the beginning of most investment agreements, and/or in those industries where technology was rapidly changing). But one would expect the benefits from foreign investment in the aggre￾gate to be rising and the cost of securing those benefits to be falling, over time.14 There are two severe limitations to this balance of power framework, however, to which dependencia analysis should draw the attention of non-dependentistas: first, the possible separation between the potential capability of host governments to exercise greater negotiating strength in their relations with foreign investors anc 13The transfer of bargaining power into Third World hands would be retarded, however, to the extent that host countries compete among themselves to get foreign investment. 14Some companies, of course, may try to balance their increasing vulnerability in certain product lines with more profitable operations in other lines where they have tighter control over technology. Peter Evans hypothesizes, for example, that American petrochemical companies in Brazil are trading "unat￾tractive" arrangements for the production of chlorine for a profitable "kicker" in polyurethane foam (TDI). "Testing the New Alliance: The Brazilian State, the Multinationals and the Launching of the Polo Petroquimico at Camacari, Bahia," Brown University, xerox, February 1976