The Power of Multinational Companies

Multinational firms are driving a large share of international trade in goods and services and are thus central to today’s world economy. But why do they exist? Why did they become so important, what are their effects and what challenges may arise for policy making?

In our 11th Innoscape Talk, we had the privilege to discuss these and other fundamental questions with Prof. Pol Antràs from Harvard University during his visit to the Faculty of Business and Economics and the Center for International Economics and Business (CIEB) at the University of Basel. As one of the world’s leading scholars on international trade, global value chains, and multinational firms, Prof. Antràs offers a deep understanding and timely perspective on the shifting dynamics of globalization. He thereby draws on his excellent research over the past 25 years he launched with his pioneering paper “Firms, Contracts, and Trade Structure” published in the Quarterly Journal of Economics in 2003.

In the Innoscape Talk he also refers to his lecture The Power of Multinational Companies: Global Value Chains and the Future of Globalization he gave the day before this interview in the packed Aula of the University of Basel, followed by a panel discussion together with the Chairman (Dr. Jörg Reinhardt) of the pharmaceutical company Novartis, headquartered in Basel.

The conversation begins with a personal journey into the field of international economics and quickly moves into an assessment of the current trend toward “Deglobalization”. Prof. Antràs explains how his research has contributed to the understanding of multinational firms and, in particular, why their presence has become so prominent over time. Contrary to the expectation that stronger legal systems might reduce the need for complex multinational structures, he explains why these firms have only become more important.

Throughout the talk, Prof. Antràs also addresses the societal consequences of globalization. He explores whether increased competition among firms might serve as a remedy for some of the adverse effects he identifies. Toward the end of the conversation, the focus shifts to policy and management strategy: how small, open economies like Switzerland can navigate in today’s uncertain global environment, and whether focusing on research, innovation, and the export of ideas rather than products might offer a sustainable path forward for Swiss multinational firms.

This talk provides a thoughtful, theory- as well as evidence-based reflection on the current development of the global economy. It offers valuable insights for anyone interested in the economic forces shaping our world today - from students and academics to policymakers and business leaders.