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.