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The Role of International Corporations in Shaping the Foreign Policy of States: Lessons for Ukraine - Ihor Petrenko


When we talk about decision-making or non-decision-making in other countries, we think of business, which, along with public sentiment, has no less, and sometimes even more, influence on the government of each country. Especially when it comes to large corporations. This was stated by Ihor Petrenko, Doctor of Science, expert at the United Ukraine Think Tank, in an article for Interfax-Ukraine.


Analyzing the influence of corporations on the foreign policy of states, especially in the context of current geopolitical challenges, we can observe how closely the interests of business and state institutions are intertwined. Recent decades have demonstrated a shift in emphasis in foreign policy, where economic competition is becoming one of the key vectors of interstate relations.


Historically, corporations have focused on globalization and market expansion, often ignoring geopolitical risks. However, the modern world demonstrates that major powers such as the United States and China are actively using economic leverage to achieve their strategic goals, influencing corporate strategies through export controls, sanctions, and incentives for domestic industries.


The changing global landscape has forced companies to become active participants in the geopolitical arena, where their actions can have a significant impact on international relations. This is particularly evident in the semiconductor sector, where the decisions of individual corporations play a key role in shaping the technological and economic security of countries.


In today's world, the interaction between the state and corporations requires a new approach, where it is important not only to regulate but also to cooperate, understanding common interests and challenges. Policymakers must adapt to new realities where economic power and technological progress are crucial factors for geopolitical stability and prosperity.


Thus, the interaction between the state and corporations in the modern world takes on a new dimension, where both sides play a key role in shaping foreign policy and international stability. Understanding these dynamics is critical to developing effective strategies that take into account the interests of the state and the strategies of companies.


Corporations in today's world can no longer act solely from a commercial perspective, ignoring geopolitics. Their decisions on investment, production, and trade have profound geopolitical implications, affecting international relations and foreign policy. For example, the choice of a location for a new semiconductor plant can affect a country's technological security and strategic position in the global economy.


Companies are now forced to balance compliance with national legislation, on the one hand, and global business interests, on the other. This is particularly evident in the context of sanctions and export controls, where corporations can find themselves caught between the hammer of government restrictions and the anvil of international market opportunities. This raises difficult questions about how to adapt to a rapidly changing geopolitical environment while remaining competitive and innovative.


State institutions, in turn, have to develop policies that take into account not only national security but also the economic well-being and innovative potential of their corporations. This requires a new level of interaction between the government and the private sector, where both sides understand and take into account each other's interests and challenges.


Thus, the current state of international relations requires corporations to be not just economic entities, but strategic players that can adapt and influence global geopolitics while taking into account their commercial interests and obligations to shareholders. In turn, governments need to develop comprehensive strategies that balance national security with creating favorable conditions for business development and innovation.


Understanding the relationship between corporations and foreign policy is critical for Ukraine, especially in the context of its dependence on external support in the war with Russia. Here are some key reasons why:


Diplomatic relations: Corporations can play a significant role in shaping international opinion and policy, so it is important for Ukraine to maintain positive relations with key international companies and their home countries to strengthen diplomatic and economic support.

Lobbying: Ukraine can cooperate with international corporations to lobby for its interests in the international arena, especially on issues related to security, economic development, and post-war reconstruction.

Economic support and sanctions: Understanding how corporations can influence foreign policy helps Ukraine to promote effective sanctions mechanisms against Russia, as well as to attract foreign investment and economic support for its own economy.

Influence on global markets: understanding the strategies of international corporations can help Ukraine adapt to global economic trends, ensure the stability of its own economy, and use global markets to sell Ukrainian goods.

Technological independence and security: the growing role of corporations in global technology supply chains emphasizes the need to develop Ukraine's own technological capabilities, as well as the importance of protecting critical infrastructure from external threats.

Infrastructure development: Cooperation with large corporations can contribute to the development of Ukraine's infrastructure, particularly in the areas of energy, telecommunications, and transportation, which is important for maintaining the country's defense capabilities and overall stability.


Thus, it is important for Ukraine not only to understand these processes, but also to actively use them to strengthen its own security, economic development and international support in the war against Russia.


This leads to a logical question: what should Ukraine do to establish relations with international corporations and win them over? To do this, Ukraine should focus on several key aspects:


Creating a favorable investment climate: Ukraine needs to continue reforms to improve the business environment, ensure legal security, fight corruption, and ensure transparency of government procedures. This will increase the confidence of international investors and corporations.

Active involvement in international alliances and initiatives: Participation in global economic and political associations can help Ukraine raise its international profile and provide more opportunities for collaboration with corporations.

Supporting innovation and technological development: attracting investment in research, startups, and innovative projects can help create new opportunities for cooperation with international technology companies.

Improving infrastructure and logistics: The development of modern infrastructure, including transportation, energy, and digital technologies, can make Ukraine more attractive to international corporations looking for efficient supply chains and investment opportunities.

Marketing and promoting Ukraine internationally: Active representation of Ukraine at international forums, exhibitions, and business events can help attract the attention of international companies by demonstrating the country's investment potential and business opportunities.

Stimulating foreign direct investment: the development of special economic zones, tax breaks, and other incentives can encourage international corporations to locate their production and research centers in Ukraine.

Developing international trade relations: The conclusion of bilateral and multilateral trade agreements can help open new markets for Ukrainian goods and services and help attract foreign investment.


By focusing on these aspects, Ukraine can improve its relations with international corporations, which in turn will contribute to economic growth, technological development, and strengthening of the country's international standing, and thus increase support from corporations, as they will have a direct interest in this.


At the same time, it should be borne in mind that attracting international corporations and foreign investment can have both positive and potentially negative consequences for domestic producers.


Potential benefits:

Technology development: Involvement of foreign companies can facilitate the transfer of advanced technologies and know-how, which will allow local enterprises to modernize and increase their competitiveness. However, no one is in a hurry to transfer technology, as competition is extremely fierce.

Infrastructure development: Investments from large international corporations can contribute to the development of local infrastructure, which is beneficial for the entire economy, including small and medium-sized enterprises.

Opening up new markets: Cooperation with foreign partners can help Ukrainian producers enter international markets, expand their customer base, and increase sales.


At the same time, there are many potential risks to keep in mind, including

Competition: International companies often have significant advantages in terms of capital, technology, and marketing, which can create fierce competition for local businesses, especially for those that cannot adapt quickly.

Dependence on foreign investment: there is a risk of over-reliance on foreign companies, which can lead to a loss of control over key sectors of the economy or vulnerability to global economic fluctuations.


Therefore, along with the development of relations with international corporations, Ukraine should implement strategies to minimize risks:

Protective measures: Ukraine can establish certain regulatory mechanisms that protect local enterprises from unfair competition, for example, through anti-dumping laws or measures on responsible corporate behavior.

Supporting innovation: The government can invest in supporting innovation and skills development among domestic producers to increase their competitiveness and reduce the technology gap.

Focus on specialization: Focusing on niches where Ukrainian companies have unique advantages or high potential can help them gain a strong position in international markets.

Maintain a dialog between the government, business, and civil society to ensure transparency and that the interests of all parties are taken into account.


Taking these aspects into account, Ukraine should develop a balanced approach that, on the one hand, encourages foreign investment and technological exchange, and, on the other hand, protects and supports local producers, promoting their growth and innovative development.

 

Therefore, international corporations are stakeholders in government decision-making, and if we want to win allies, we should develop relations not only with politicians and parties, but also with corporations. Politics loves money, and it is mainly business that invests in politicians, and this is true for all countries. This is a difficult task, as we have to implement strategies to protect domestic producers. But the world is a pragmatic place, and the further we go, the more understandable the language of profits, not values, becomes. Obviously, we need to take this into account...


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