As the global economy gets integrated, national or local corporationswill gradually transform in to a multinational corporation (MNC). When thistype of development occurs, the host countries are usually the ones that becomethe immediate stake holders. This is because when a MNC sets its foot into ahost country, there are economic, political, social and environmental impactsthat result from their corporate actions.
In many cases, it is certainlypossible that it can end up in a win-win situation, if the host country and theMNCUs both work mutually. However there have been unfortunate examples, wherethis has not been the case. In general, international agreements have its advantages, due to thefact that we can harmonize international standards. Therefore environmentalconcern is one of the key issues that the policy makers and MNCUs should set ahigh priority on. This is because growth and development is strongly correlatedwith environmental degradation. Furthermore, it is fair to say that the MNCUsare more likely to have a more harmful environmental impact from growth anddevelopment, as opposed to the local corporations.
This is because MNCUs maynot be as knowledgeable as local corporations in resource utilization and landmanagement. This also refers to the notion of Rthe locals know their landbetter than anybody elseS. The tropical rain forest of Brazil is a good exampleof this. The RindigenousS or the local people have a good understanding of howto extract and utilize its resources in a very sustainable manner.
However whena multinational timber company comes into Brazil, result of their actions willprobably be more harmful, due to the fact that they are not complying to theRtraditionalS methods. Another important aspect is the fact that in any international tradeagreement, a MNC is most likely going to shift their production to a lesserdeveloped country. This is because LDCUs are a good target for cheap labor andlow start-up costs. In Robert PastorUs essay, he mentions the termmaquiladoras; Rcheaper labor that allows them (Mexicans) to assemble parts,import from the U. S. and then reexport the assembled productsS.
In places suchas the maquiladoras, safety standards are not as rigid and this puts the localworkers in a serious health risk. The Rblack lungS case is an example whereminers in Latin America contracted respiratory diseases from working at unsafelyregulated coal mines. Since it was in a lesser developed country, occupationalhealth standards were lower than the usual. The Union Carbide incident fromBhopal, India is another example, where the explosion took place due to lack ofsafety and precautionary measures. Many experts have commented that the UnionCarbide incident could have been completely avoided, if the plant was locatedelsewhere, in a more developed country, where they have more strict standards. So there is a need for universal standard on these types of issues.
Unless thisis achieved, the LDCUs would be placed in a vulnerable situations as more andmore MNCUs will take advantage of this. When MNCUs come into a host country, this increases their revenue andtheir GDP. However this does not necessarily mean that everyone benefits fromit. This is especially the case in the most third world countries. The benefitsusually go to the elites or sometimes to the ones living a more urbanized areas. This disrupts the level of equality as the few rich individuals get richer and agreat number of poverty stricken individuals get poorer.
This also increasespolitical corruption. A good example of this is the case in Brazil with thediscovery of oil in the late 1960Us. The level of corruption resulted in anunprecedented amount of national debt, leaving them worse off then before. Inaddition the Brazil suffered a great deal of environmental and resourcedegradation as a result of unsound environmental activities from the MNCUs . AsWalter Reid puts it, there a need for Rgovernments to have a responsibility toinvest a share of the national benefits in rural developmentS.
Most free trades also make it more difficult to push a politicalagenda. Major power such as the U. S. use economic sanctions on other countriesto enforce their political agenda. Not too long ago, the French government wasengaged in funding for nuclear testing. Most U.
N. officials as well as the U. S. were outraged by the fact that France was not complying with the internationalarms agreement. As you know nuclear testing not only encourages theinternational arms race, it also has a detrimental effect on the globalenvironment.
However, because U. S. was engaged in a heavy free trade withFrance, this made it more difficult to impose an economic sanction. So there isalso a need for more serious political considerations, when being engaged in afree trade.
In this case, the Department of Commerce should have carefullyreexamined the political and military criteria, before a high level of freetrade took place between the U. S and France. But as the world becomes more integrated socially and economically,the idea of expanding the international trade will have numerous benefits, ifthey are carried out in an RappropriateS manner. After all, free trade promotestransfer of living in LDCUs as well as improving economic efficiency. This alsoallows increase in efficient use of natural resource, which can have numerousenvironmental benefits. NAFTA is a good example of an environmental successwhere the U.
S. EPA and MexicoUs SEDESOL worked closely together to achievecommon environmental goals. Free trades can serve as an instrument that canincrease international cooperation. However it can have an enormous unintendedconsequences.
Therefore there is a need for more scrutiny in the decisionmaking process.Category: Social Issues
