Multinational Corporations (MNCs)
Multinational Corporations are frequently accused of polluting the environment, of running sweatshop in Third World countries, of exploiting these countries, and of putting profits ahead of people.
One ought to begin by distinguishing between the Marxian critique of all multinational corporations, because they are part of international and world capitalism, as inherently bad and evil, and the more reasonable (and responsible) critique that say that multinational corporations, Likes all human institutions, sometimes, make mistakes, are self-serving, sometimes try to cheat or skirt the law, then try to cover up these mistakes, and , in general, act in their own self interest. The Marxian critique is a minority one, except perhaps on some college campuses and among some, radical groups of protestors; "true believers " of this position are usually immune from rational, reasoned persuasion to any other point-of-view because, for them , Marxism is like a religious faith that is not subject to empirical verification. Here we focus on the more reasonable critique that is subject to the marshaling of evidence and, hence, a more balanced view.
Let us face facts: MNCs do muck around in the internal affair of other nations ( less now than is earlier eras), do have profit as their primary motive ( that, after all, is why they are in business), and do sometimes ( but now rarely) engage in nefarious, illegal activities. But let us balance this view with the facts that (1) most MNCs try, in their own interests, to be Good Neighbors in the countries Where they may locate; (2) the MNCs generally provide higher salaries and better benefits than do local firms, and often housing, health care, and meal to their workers; (3) fearing the consequences (nationalization of their properties), most MNCs scrupulously obey the laws of their host countries and try to accommodate to local norms (which may also involve payoffs and bribery, but then, "everybody does it"); and (4) most importantly, the MNCs provides sorely needed investment, jobs, and a stimulus to the economy which almost all Third World countries are desperate to receive.
Worawan Kitkasun
22:25
Worawan Kitkasun
The issue, therefore, is not that all MNCs are evil and all developing nation government are always right and pure of motive. Rather, the issue is one of balance. The facts are that the largest MNCs can mobilize more influence and political connections than can many Third World countries; that give them immense bargaining power. On the other hands, skillful Third World countries, including small ones, can also have considerable influence in the negotiations that take places. They have the resources and primary products the MNCs want, the expanding middle-class markets, the labor supplies, the favorable tax advantages, and the knowledge that MNCs wish to come into their country. Plus they wield the ultimate threat: the possibility of nationalizing the company, or its technology, that invests in their countries-although most Third World countries nowadays are so desperate for capital that they don't want to risk future investment by nationalization.
These advantages show that developing countries are not without influence in dealing with big companies. The result is usually a genuine bargaining situation, one of interdependence as well as dependence, in which both the country and the company negotiate to get more of what they want. It is true, of course, then companies try to get the best deal possible out of these negotiations, but then so do the countries involved. A country with a skilled, adept leadership can often get much of what it wants from these negotiations. In most cases, it becomes a partnership based on mutual interest that emerges, not a one -way street in which one party holds all the best cards.
So, it there a "race on the bottom," as some have alleged? By that is meant that MNCs "shop around " to find the country with an even lower wage scale. The answer is, not really. There are a few cases of this and recently we have seen a handful of MNCs in Mexico move to Southeast Asia because environment laws, labors laws, and wage rates are lower or less enforced there. But many things factor into company's decision to locate, including proximity to the big U.S. market, transportation costs, banking and financial institutions, honest government and future stability, as well as wage rates. Plus, most MNCs, once invested in a country in the from of factory or assembly plant, have a huge stake there and cannot just pull up and relocate elsewhere on short notice. So while, of course, there is a tendency for companies to go to the places that offer them the most advantage, that also involves a bargaining process with the Third World government that a not without their own advantages in these talks; and once established in a particular country, most companies are reluctant to leave and world only do so under extreme circumstances: political instability in the country involved, severe economic pressure, such high leave of corruption that is impossible to generate there, or a complete breakdown in the dialogue with the host country. The picture is thus not black or white; instead, the image we should have of most MNCs-Third World country relations is one constant, ongoing bargaining and negotiations.