7 Conclusion
We have developed a model that gives a rational to both the desirability of
MAI and the observed problems in its implementation. We have shown that the
externalities arising from the FDI-redirection effects of MAI might explain the
failure to implement MAI and the emergency of coordination failures that give
rise to multiple equilibria. We have also shown that after the implementation of
MAI some countries (either MAI members or outsiders) could lose. This might
explain why we have recently seen some countries strongly opposing the mere
proposal of MAI.
Our model is highly stylized. However, the main message is likely to remain
unchanged in a framework where MNEs decide upon their locations taking into
account countries’ market size, factor prices, or trade barriers. We expect in-
stead that a more sophisticated representation of the process of MAI implemen-
tation may affect our conclusions. Future work should check the robustness of
our results when, for instance, MNEs are engaged in active lobbying, or when
countries weigh differently the welfare of different agents when deciding about
MAI membership.
21
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