Advocates of the multinationals often see them as positive forces in economic development, creating jobs and bringing capital, technology, and expertise to communities or countries that might have difficulty developing these resources on their own account. Their critics, though, tend to see them as authoritarian juggernauts that are ultimately out to exploit their hosts for all they can get. The argument identifies the horns of a major dilemma in that the policies that serve the interests of a multinational firm may not be in the best interests of the community or nation in which the firm is located. Hence, given the immense power of the multinational firm, its hosts often find themselves having to rely on a benevolent social responsibility on the part of the multinational.
The record of the multinationals in this regard, however, leaves a great deal to be desired. The highly centralized systems of decision making frequently mean that centralized corporate interests relating to the profitability, growth, or strategic development of the multinational as a whole take first place in decision making, with localized community or national interests taking second. Thus, when strategic considerations lead the executive staff of a multinational to divest its holdings in a particular industry, to close down a particular plant, or to restructure its operations internationally, the consequences can be devastating for the communities and countries involved. Consider, for example, how the shift in search of cheaper, non-unionized labor has led many firms to leave relatively high-priced cities in Canada and the northern United States for locations in the southern states, Mexico, Brazil, or Asia. The effect has been to create large areas of regional and urban decline. The effects are particularly marked in small communities where the decision of the multinational to close down operations of a major plant can remove the economic lifeblood of the community. Regional exodus also creates massive structural unemployment, increasing welfare rolls, and intensifying the fiscal problems faced by governments. The bitter irony is often that many of these decisions are made not because a particular plant or set of operations is unprofitable, but because the corporation believes that it is possible to earn greater profit elsewhere.