Transnational Corporations Flashcards
Transnational Corporations/Multinational Corporations
Businesses that operate across international borders.
TNCs Example
Christian Aid estimates there 63,000 TNCs in 2017 with around 690,000 subsidiaries between them that operate in every sector of the economy in almost every country in the world.
TNC Introduction
-TNCs have increasingly been moving production to LDCs while research and development remain in DCs
-FROBEL: ‘the new international division of labor’
-TNCs now play a role in the development of 3rd world countries
=Examples: Nike, Walmart and Trafigura (180b)
Modernisation Theory
- TNCs contribution to third world countries is positive as they bring jobs, wealth and new tech to these poor countries who have basic tech and based on agriculture
- They are contributors to ‘modernity’ which is the process of industrialisation and new working practises that create the conditions necessary to trigger the development
- TNCs improve standards in multiple areas of life in these countries and not just for the people they employ
Modernisation Theory: Rustow
- Proposed five stages of development.
- They take third world countries from the first stage (traditional society) to the second by investing money in factories to produce goods over agriculture, as they offer jobs that are paid more which in turn means they have more money to spend in the wider economy which gets stimulated as a result
Modernisation Theory: Example
- Vietnam: Was one of the worlds poorest countries
- Nike set up a sweatshop.
- Average wage at the time was $18 while the Nike workers earned $54 which is more than doctors and teachers.
- Benefited women as they made up 90% of the workforce and can progress as much as men.
- Children got sent to the school’s over work, fell by 2.2 million showcasing modern values.
- microloans to local companies around them to continue the stimulation of the local economy
Modernisation and Neo-Liberal Theory
-Agree with modernisation
-Economic success to them is proof of competence because they are economically successful at producing goods and have been for a long time
=Annual Revenue of the 2000 largest TNCs exceed the GDP of 182 nations that contain 80% of the world’s population
Neo-Liberalism
- Lobby for the removal of trade barriers and the implementation of the free-market in LDCs to create a business-friendly environment so TNCs invest and contribute to development
- A marketplace is more appealing to TNCs as they will battle for market share, driving up wages and putting the workers in better positions
- Governments should step back and allow it to happen
- Increasingly influential ideas. Adopted by the IMF whose goal is to promote global development through poverty reduction. Recognise TNCs ability to help.
- Wealth generated from TNC investment and production should trickle down
- Encourage EPZs
Neo-Liberalism Examples
=American multinationals pay wages 8x higher than the average income of poor countries
=Norberg: Agrees and suggest by doing this country becomes wealthier and life chances have increased (Marketplace)
=Klein: 18 million in China that live in 124 zones there. 35,000 around the world that employ 66 million in over 130 countries
Modernisation and Neo-Liberal Evaluation
-Dependency and Feminists argue that TNCs are bad as they exploit these countries through cheap labour and relaxed labour laws that don’t protect. Also, increase inequality for women as 90% of people employed in EPZs are women, so exploited and patriarchy is reinforced.
-Norberg: Sweatshops are a natural part of the process and that even Sweden has them like in Vietnam.Criticism.
-TNCs use shortcut to obtain profits, workers are underpaid and abused. No modern values are transmitted. No health and safety, equality or human rights. TNCs contribution is negative. Profit then helping development as want prices low
=Walmart was linked to the slave trade in Thailand/in 2014 an SOS message and a letter was found in Primark products that detailed the conditions the Chinese workers were facing. Work like an ‘Oxon’, 15 hours a day and food not even suitable for Dogs
-Destroy the environment to obtain profit.
=UN stated that the top 3000 companies would lose a third of their profits if they were forced to pay for the use, loss and damage to the environment. 2.2 trillion dollars worth of damages. So not bringing eco-friendly tech
Dependency Theory
- TNCs encourage inequality because they benefit from the maintenance of the ‘Chain of Dependency’
- Frank: Developed countries or ‘metropolis’ control developing countries or ‘satellites’ to make sure they stay underdeveloped so that TNCs can exploit the developing countries and keep doing so.
- TNCs use their power and influence over governments of DCs, LDCs and international bodies (IMF) to create a policy environment that benefits them.
- SAPs is another way dependency is maintained. This ‘aid’ is known as ‘tied-aid’ as the restrictions and conditions placed on them benefits TNCs and restrict the social mobility of the developing countries citizens mobility by forcing them to spend any money made on TNCs and not on infrastructures like hospitals and schools.
Dependency Theory: Examples
=Coca Cola has been known to sponsor political candidates in the US to ensure favourable laws that work in their benefit, also operate knowing governments of DCs’ won’t hold them accountable in fear of losing their funding or them relocating
=Oxfam found that if Africa, East and South Asia and Latin America increased their marketshare in global exports by only 1% 128 million would be lifted out of poverty
-TNCs contribution is negative as they are trying to keep things the way they currently are over improving them
Marxist Feminism
- The ideas of Mod aren’t about positively aiding the development but instead imposing exploitative systems of capitalism on LDCs
- TNCs move production to LDCs and the EPZ within them for tax breaks, cheap labour and lack of safety laws
- TNCs purposely employ more women (90% workers in EPZs are women) because most developing countries exist within patriarchal systems so the women are easier to control as they have been raised to be obedient and not protest against unfair treatment.
- Proving that they do not transmit Modern Values
- Instead of eliminating sexism they use it to their advantage by paying them less for more work than men and by abusing them at work. Firing when they get pregnant
Marxist Feminism: Elon and Peterson
TNCs aid the ‘womens material subordination as a gender’ meaning that TNCs operate knowing that women will just accept this.
Evaluation of DT and MF
- Benefit women from developing countries in some ways. Provides them with more money then they would earn in agriculture and money gives them power in their households and an escape route from things like arranged marriages
- Foster-Cater: Suggests that this was natural as change naturally brings exploitation. This is the price that women must pay for working and getting an income. Long hours, low wages and harassment but this is not right and still sexist
