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Globalization & Corporate Power

John Pilger

CORPORATE POWER

Multinational corporations are the driving force behind globalisation, and many commentators agree that they have benefited from it most. Larger than many host nations, the multinationals are often in a powerful position to dictate terms. Payment of bribes or 'commission' has fuelled corruption and secured favourable terms for multinational companies in their operations around the world.

The consequences of this growing corporate power can be seen clearly in relation to their foreign investment role. At its best, investment by a foreign company can provide jobs, stimulate economic growth and offer developing countries access to key technology and skills. At its worst, multinationals just exploit the cheap labour or natural resources which poor countries offer, and leave them nothing in return. So how can we ensure that all investment follows best practice?

Many governments have made performance requirements of multinationals so as to ensure that their presence works for the benefit of the host community. For example, any hotel chain wishing to start up business in China has had to do so in partnership with a Chinese enterprise.

Most of the staff employed at the hotel must be Chinese, and the resources needed to run the hotel must be bought from local producers, ensuring that local people benefit from the new jobs on offer. Because the hotel is jointly owned, its profits are shared between the foreign and Chinese sides. In this way, China has managed to use foreign investment to its maximum advantage.

By contrast, many hotels in the Caribbean are 100% owned by the foreign firms who run them. Often the only jobs available for local people are as poorly paid cleaners or other low-level staff, since the managers come from Europe or the USA. Much of the produce on sale at the hotel will have been imported from abroad, leaving fewer opportunities for local firms to develop as suppliers. As a result, it is estimated that 80% of the profits from tourism are whisked out of the Caribbean altogether.

Under the current rules of globalisation, performance requirements on foreign companies are increasingly being outlawed. Indeed, as part of its bid for membership of the WTO, China has had to amend its national legislation to drop many of the requirements it used to place on foreign firms. While this allows the multinationals to make greater profits, it prevents local communities from enjoying the benefits of investment. Often they simply find themselves exploited as cheap labour.