182 International Organization investors.Below we suggest three mechanisms through which these institutions hinder FDI inflows. Effect on MNE exploitation of monopolistic or oligopolistic position.Dem- ocratic institutions in host countries attenuate many MNEs'ability to exploit and enhance their monopolistic or oligopolistic positions.As discussed earlier,firms invest abroad to take advantage of their ownership-specific and internalization ad- vantages,advantages that often result from,and further result in,oligopolistic or monopolistic market structures.29 Such large MNEs constitute the bulk of FDI,30 possess enormous market power,and have significantly shaped trade patterns and the location of economic activities in the global economy.31 In the host countries, such MNEs seek to create and strengthen their oligopolistic or monopolistic posi- tions that result in higher returns.The associated imperfect market structures,how- ever,lead to less optimal allocation of resources in the host economy than perfection competition.While MNEs consider the pursuit of monopolistic or oligopolistic positions a legitimate corporate strategy for greater returns,their desire to create, maintain and increase their monopoly or oligopoly positions sets them at odds with host country governments,particularly democratic ones.32 In more democratic host governments,elected politicians presumably encour- age and manage inward investment to improve national economic performance, benefit their electoral constituencies,and increase their odds of being reelected. That many MNEs may decrease market competition motivates elected politicians to limit the monopoly or oligopoly positions of the relevant MNEs through public policy.In reaction,the MNEs may seek to bribe and collude with the host govern- ment to influence domestic politics of the host country.33 However,freedom of expression and open media bring about relatively better monitoring of elected pol- iticians and allow the opponents of FDI to access the public policymaking process relatively more easily.Hence,democratic characteristics of the host country col- lectively constrain the pursuit by many MNEs of monopoly or oligopoly. Conversely,more autocratic host governments are less likely to clash and more likely to collude with the oligopoly or monopoly-seeking MNEs.By definition, the size of the winning coalition for autocratic leaders is smaller than for demo- cratic leaders because autocratic rulers depend less on broad popular support to stay in power.While such rulers are happy if FDI improves national economic 29.Dunning 1993;and Stopford and Strange 1991,74. 30.Graham 1996. 31.For example,the hundred largest MNEs control about 20 percent of global foreign assets,em- ploy about 6 million workers and account for about 30 percent of total world sales of all MNEs.Con- temporary MNEs further strengthen themselves vis-a-vis the state by collaborating with each other through mergers,acquisitions,and strategic alliances.The number of strategic alliances-cooperative ventures between firms of different countries to undertake research and development-rose from 280 in 1991 to 430 in 1993.United Nations Conference on Trade and Development 1997,8,14. 32.Our argument is consistent with the evidence at the aggregate level in Oneal and Oneal that efforts to pursue supernormal profits by British and American MNEs appear thwarted in the develop- ing regions.Oneal and Oneal 1988. 33.Bergsten,Horst,and Moran 1978;and Tarzi 1991.182 International Organization investors. Below we suggest three mechanisms through which these institutions hinder FDI inflows. Effect on MNE exploitation of monopolistic or oligopolistic position. Dem￾ocratic institutions in host countries attenuate many MNEs' ability to exploit and enhance their monopolistic or oligopolistic positions. As discussed earlier, firms invest abroad to take advantage of their ownership-specific and internalization ad￾vantages, advantages that often result from, and further result in, oligopolistic or monopolistic market structure^.'^ Such large MNEs constitute the bulk of FDI,30 possess enormous market power, and have significantly shaped trade patterns and the location of economic activities in the global e~onorny.~' Inthe host countries, such MNEs seek to create and strengthen their oligopolistic or monopolistic posi￾tions that result in higher returns. The associated imperfect market structures, how￾ever, lead to less optimal allocation of resources in the host economy than perfection competition. While MNEs consider the pursuit of monopolistic or oligopolistic positions a legitimate corporate strategy for greater returns, their desire to create, maintain and increase their monopoly or oligopoly positions sets them at odds with host country governments, particularly democratic ones.32 In more democratic host governments, elected politicians presumably encour￾age and manage inward investment to improve national economic performance, benefit their electoral constituencies, and increase their odds of being reelected. That many MNEs may decrease market competition motivates elected politicians to limit the monopoly or oligopoly positions of the relevant MNEs through public policy. In reaction, the MNEs may seek to bribe and collude with the host govern￾ment to influence domestic politics of the host country." However, freedom of expression and open media bring about relatively better monitoring of elected pol￾iticians and allow the opponents of FDI to access the public policymaking process relatively more easily. Hence, democratic characteristics of the host country col￾lectively constrain the pursuit by many MNEs of monopoly or oligopoly. Conversely, more autocratic host governments are less likely to clash and more likely to collude with the oligopoly or monopoly-seeking MNEs. By definition, the size of the winning coalition for autocratic leaders is smaller than for demo￾cratic leaders because autocratic rulers depend less on broad popular support to stay in power. While such rulers are happy if FDI improves national economic 29. Dunning 1993; and Stopford and Strange 1991, 74. 30. Graham 1996. 31. For example, the hundred largest MNEs control about 20 percent of global foreign assets, em￾ploy about 6 million workers and account for about 30 percent of total world sales of all MNEs. Con￾temporary MNEs further strengthen themselves vis-a-vis the state by collaborating with each other through mergers, acquisitions, and strategic alliances. The number of strategic alliances-cooperative ventures between firms of different countries to undertake research and development-rose from 280 in 1991 to 430 in 1993. United Nations Conference on Trade and Development 1997, 8, 14. 32. Our argument is consistent with the evidence at the aggregate level in Oneal and Oneal that efforts to pursue supernormal profits by British and American MNEs appear thwarted in the develop￾ing regions. Oneal and Oneal 1988. 33. Bergsten, Horst, and Moran 1978; and Tarzi 1991