Abstract/Summary

The potential of multinational enterprises (MNEs) to accelerate economic development and reduce inequality has been recognized since the industrial revolution, when states sought to actively engage foreign capital in industrialization. Over time, the MNE-state compact has waxed and waned in significance due to (geo-)political developments, shaped in part by how the economic surpluses of foreign capital were distributed between domestic actors. Government policies matter as to how they prioritise international competitiveness relative to domestic inequality reduction. The contemporary rise of within-country income inequality alongside increasing globalization has drawn attention to the causes of inequality (including the activities of MNEs) to the forefront. Scholars in development studies have examined the underlying causes of increasing income inequalities through the lens of inequality of opportunities. We discuss how adopting this lens could advance our understanding of how MNEs influence inequality, directly and in interaction with the state. Subsequently, we propose a research agenda, taking into account micro-, meso- and macro-level perspectives. In our discussion, we explicitly highlight that the MNE-state compact is dynamic, continuously changing with the evolving political and socio-economic landscape. MNEs can have an impact on inequality of opportunities, contingent on the nature of their engagement with states and other stakeholders.