Criminal Multinational Enterprises and Host State Relations: Insights from Transaction Cost Economics

We contribute to MNE-state relations research focusing on criminal multinational enterprises (CMNEs) as distinct entities in the global economy. CMNE-host state relations vary from competitive confrontation to complicity, state capture, even state-led criminal activity. While developed country CMNE-host state relations are strongly influenced by relative bargaining power, developing economies may adopt complicit relations affecting stability and development. Applying transaction cost concepts to (criminal) locational attractiveness and state strength, we examine possible forms of association (competitive, complicit and state-capture) and their determinants. Criminal multinationals that collaborate with state officials to forge narrow and exclusive bargains negatively impact equitable institutional and economic development. The nature of CMNE-host state relations also strongly influence the structure and strategies of criminal multinationals, understanding of which should underpin anti-crime policies.