When debating the effects of Globalization, and Transnational corporations people often look at it from the point of view of how the developed world benefits and takes advantage of the developing world. This in many cases is true, as it has become quite common for companies that originate from rich countries to move factories and production overseas where they can exploit the people and resources from the poorer country. It can be argued that this practice creates jobs, helps the economy, and kick starts development for the developed country, however on the other hand arguments can also be made that these trans-national corporations do more harm than good in a sense that they put little money back into the developing country, and can have many detrimental effects on the environment by using resources at unsustainable rates. It is quite clear to see that trans-nationals and the process of globalization are beneficial for countries of the developed world as it helps companies cut their expenses by having their products produced for cheaper cost, lower labor and environmental standards, and also helps keep the cost of products in the developed world lower for consumers. One component of globalization and emergence of transnationals often overlooked however is the fact that the movement of factories, and production to the third world effects many in the developed world as it leads to a loss of a significant amount of jobs, and in turn hampers the economy as it leaves many unemployed. The question is whether or not globalization, and the emergence of transnational cooperation’s has negative, or positive effects on the world at large, considering both the developed, and developing countries.
For a developing country wishing to emerge on the global scene, transnationals are a vital component for it to be successful. Transnationals employ many people in these countries, and most importantly employ unskilled laborers who would have difficulty securing a job otherwise. Thanks to transnationals these unskilled laborers are given the chance to work, all though at low wages it is still a benefit to the economy, and society as a whole. Transnationals also have the ability to invest money into education and training programs in these developed countries, and in turn increase the standard of living within these countries as Richard Harries explains (Harries 1993). Harries also goes on to state that the developing countries have become dependent, and rely on the corporations in order for money to assist with development, and access to markets they otherwise would not have business in (Harries 1993). The relationship between the developing countries and Transnational corporations has become a reciprocal one, where if done correctly each side can experience benefits.
Harries explains the conditions in which both sides benefit and it is when the corporations realize that in order to be successful the country in which it is located needs a share of ownership, operation, and taxation, and thus in change the country must realize that the corporation needs conditions which allow it to make profit and then is able to develop resources within the country (Harries 1993). This shows that when done correctly the relationship between transnational corporations and the developing world can in fact be beneficial not only to corporations, but also the developing country if certain conditions are met.
One of the most pressing issues for developing countries is that poverty has become a commonality for a majority of the people living there. Coincidentally one of the biggest attributes brought on by transnational corporations in the developing world is the ability to reduce poverty in the region. It is well known and accepted that the corporations are able to provide unskilled laborers with jobs even though low paying ones, but that is not where the economic benefit stops for the corporations in the developing world. Multi-Nationals are in fact key to poverty reduction because as Global Envision explains poverty reduction is dependent on the growth of business, particularly small and domestic ones, and Multi-Nationals are able to aid these businesses through credit, technology, and access to the world market (Global Envision 2006). The other crucial item brought on by Multi-Nationals is that they are engines of change, and one of the keys to elimination of poverty reduction is that systematic change is required (Global Envision 2006). Multi-Nationals can bring on systematic change in many ways, they bring western ideals in ways of business, and political policy and since they have leverage with the local government (Global Envision 2006), they can imply these changes more quickly than the local people. As well as mentioned previously corporations have the financial ability to put money back into the developing country which under the right circumstances can be put towards the building of schools, hospitals, roads and infrastructure (Global Envision 2006).
It is quite possible as we see for multi-nationals and developing countries in which they establish in to have a relationship were both sides benefit. When the circumstances are right, and the government and the corporation are on the same page, the developing country can provide conditions which allow the corporation to be very profitable, and then in turn can put money back in to enhance the development project. The truth may be that multi-nationals are the only hope for the developing world, as they hold the key to systematic change, which is crucial for development.
There are many potential benefits from the emergence of transnational for both the developed, and developing world. However in many cases these potential benefits are pending and require a lot of cooperation from both sides in order to be successful. When both sides do not cooperate however that is when the problems we often associate with transnationals and developing countries begin to emerge. These include environmental complications, as well as social issues such as proper working conditions, and labor rights.
As discussed earlier, it is realized that multi-nationals have the ability to improve the economy, and economic position of developing country, however this often comes at the cost of the environment and resources of the developing country. In fact a direct relation has been made where if a country experiences a growth in Gross Domestic Product through industrialization, environmental impacts are also experienced including resource depletion, pollutant, and increase in greenhouse gas emissions (Mason 1997). Also considering the little infrastructure that is developed in these countries, it means that a lot of the waste produced by the factories may in fact go untreated (Mason 1997), this means potential water contamination which can be devastating especially if the region is all ready facing water shortages. This shows that developing countries are in fact quite susceptible, and prone to environmental implications brought from the emergence of transnationals in their countries and taking into consideration that trans-nationals account for 50% of global CO2 emissions, and 60-70% of CFC production (Mason 1997), indicates that they are not very environmentally conscious, and therefore pose as a serious risk to the resources, and environment of the countries, as well the world as a whole.
One incident where the environment of a country was hurt because of a transnational moving into a region was in India where a Coca-Cola plant was blamed for the diminishing water supply in the region. Following the opening of the factory, water levels dropped by a significant amount and then ended up disappearing all together, this taking place in a region that all ready experiences scarce water supply to begin with (Jeffrey 2006). This rift created much tension between the people living in the region, and Coca-Cola, as it has been suggested that Coca-Cola plants require 3.9 litres of water for every 1 litre of Coca-Cola they produce (Jeffrey 2006). It is quite evident why the people would be furious over the company for their water consumption, and blame them for the loss of their own water supply. This again raises the questions as to whether or not the economic benefits brought on by the corporations are worth the environmental destruction that can result. As well do transnational bring forth forward progress for developing countries? Or is it more of a sideways movement because of the environmental loses that result because of their economic gains?
Human right groups have long targeted Multi-national for the inhumane practices and poor working conditions that are often seen in factories or “sweat shops†set up in developing countries. It is common for Multi-nationals to establish factories in developing countries were they have their products manufactured at a fraction of the cost. This is because they are able to pay the workers significantly less than they would in a country such as Canada, as well with less regulations in terms of environmental and workers rights allows for the corporations to make significant savings. Various NGOs have begun to target the corporations and have even forced them to come up with codes of conduct for workers rights, and only did so after they received harsh criticism from the NGOs (Lewis, Macleod 2004). This shows that corporations are not interested nor care about the workers rights, and are only interested in making as much profit as possible. In addition to this Douglas Lewis, and Sorcha Macleod explain that Global compact (nine principles relating to human rights, labor and environmental development); require member corporations to provide concrete examples of measures taken to comply with the nine principles. It was found that out of 30 corporations that took part none of the examples were deemed worthy of publication (Lewis, Macleod 2004). Thus this shows that despite the movement by NGOs to create more social responsibility by corporations very little improvements have been made, which is a cause for concern for people of developing countries.
When we think of globalization and the emergence of transnationals we often think of it in terms of the developed world being a benefactor, and exploiting the developing world for its resources, and people within the developed world reaping all of the profits. However the emergence of transnationals, and the globalization projects has created a lot of negative components for the people in the developed world as well. One example of this is when a Wal-Mart moves into a non-metropolitan market it reduces grocery store sales in the centre by 17% within 2 years (Stone, Artz 2006). Also in addition to this it is suggested that the smaller stores may lose even more revenue as they are forced to continually lower their prices in order to compete with corporations such as Wal-Mart (Stone, Artz 2006). Another case where we often see transnationals negatively affecting the people of the developed world is the relationship with farmers, and large corporations. Peter Dowling explains that modern food production is part of a chain that includes oil, seed, fertilizers etc, in which every link is dominated by multi billion dollar corporations, this leads to the corporations that supply farmers and buy the finished product to flourish while the farmers struggle (Canada and World Backgrounder 2002). This relationship shows how large transnational corporations can also affect people in the developed world, and how the negative consequences are not just occurring within the developed world.
The movement of manufacturing from the developed developing world has been a great benefactor for large corporations as they are able to have their products produced at a fraction of the cost. However one thing often overlooked is that this has hurt the economy in regions such as Michigan, and Ontario are very dependent on industry for employment. The loss of manufacturing jobs has left many unemployed, and has hurt the market that the large corporations depend on for consumption. Many other sectors are also affected, as Amy Lane explains in Michigan because of the great loss in jobs from the manufacturing sector it has hurt the service employment as well, which includes retail, financial activities, and leisure and hospitality services (Lane 2006). This shows how the loss of manufacturing has created a ripple like effect across all sectors of the developed world, and this is one of the prime examples as to how the emergence of transnational corporations is in fact harmful to the countries of the developed world as well the developing.
The emergence of globalization as well as the trend for transnationals to move business and manufacturing to the developing world is a thing we must face, as it seems there is no end in near sight. Since the main goal for large corporations is to make money they will stop at nothing in order to achieve this, including depleting the environment and resources, breaking many human rights violations in search of cheaper labor, and even destroying the lives of people in their own countries by shipping their jobs overseas. Growing up in a small Ontario town that was dependent on industry, I have witnessed first hand the negative implications of de-industrialization and in a bigger scale globalization can have on small rural centers. First of all the movement of industries over seas has seen a couple of factories which employed hundreds of people closed down, and left these people in need of other employment. This then causes the people to either leave town in search of other jobs, or remain unemployed. This then hurts the people in retail and service sectors in the town as their market has considerably decreased. Also when large corporations such as Wal-Mart owned by Americans move into the town it also hurts the smaller businesses, and this shows just how the developed world can also be negatively hurt by globalization, and the emergence of transnationals corporations. In terms of the developing world, it can also be negatively affected by the emergence of transnationals into their country. First of all the people who are employed are often faced with long hours, with minimal pay, and usually deal with very poor working conditions. As well on top of this they may see the transnationals severely deplete their resources, as we saw in the India case where Coca-Cola used up all of the water supply in an all ready water scarce region (Jeffrey 2006).
Considering all of this we can see clearly how the trans-nationals, and the emergence of globalization can be negative on a global scale be having negative implications on both the developed, and developing world. However under the right circumstances these recent trends can in fact be beneficial to the developing world in aiding with their development. These transnationals can provide jobs to people, as well have the capability to invoke change because of their close connections with local governments, and their ability to invest money into education, health care, and infrastructure. Therefore in my opinion in order for globalization, and the emergence of trans-nationals to be considered a success all these factors must be met, and corporations must be required to give back to the developing countries which they exploit, and until this happens on a regular basis transnationals, and globalization as a whole will continue to be a negative for the developing countries they exploit, and the developed world in which they make unemployed.
