B. Work in groups. Discuss the following.

· What stimulates the activities of multinational corporations?

· Why do you think multinational corporations are considered to be weighty in promoting globalization?

Listening

A. You are going to listen to several political observers analyzing the role intergovernmental organizations and multinational corporations play in promoting globalization. Before you listen, study two opposing points of view on their activities and decide which one you agree with more.

1. Intergovernmental organizations and multinational corporations have become increasingly prominent in the development of international collaboration. Harmony and progress have not only been fostered by free trade, but have also been proven by the evidence of our times. Shared economic interests beget friendships and alliances between formerly antagonistic nations. Wars and conflicts are avoided, lives are not put at risk. Thus, all these players of globalization are no longer seen as merely advisors and observers to international cooperation, but they take a more active role as a source of expertise.

2. Hypermobile global players are moving around the world in search of territories with higher subsidies and lower labour costs. Governments compete for multinational favor by offering attractive terms, including concessions, tax holidays, advantageous depreciation, low cost land for factories and other incentives. The owners and managers of global corporations in their turn view the entire world as their factory, farm, supermarket, and play‑ground. As a result the prize won by governments in granting short-term advantages brings devastation in the long run since improvements in the material aspects of the human condition are not worth the social cost.

B. Growing activism of globalization promoters does not mean that they operate flawlessly. Together with beneficial outcomes of their activities, there are many detrimental consequences. Match positive effects of the activities of multinational corporations with possible negative results.

Positive effects
		Investment and increased export income improves a country’s balance of payment.
		Multinational corporations introduce otherwise unavailable goods and services that are essential for diversifying production.
		Transnational corporations increase productivity of labor by supplying foreign technology and training a skilled workforce.
		Workers of multinational corporations receive wages that are often substantially higher than those earned from traditional jobs in developing countries.
		Multinationals stimulate local entrepreneurship by subcontracting to local industries and enhancing competition.
		New domestic industries appear due to an opportunity for technology transfer.
		Host government consider multinationals to be a source of tax revenue.
		Specialization of production creates economies of scale, making exports more profitable and competitive, which increases national income.

 

 

Negative effects
A	Transnational companies exacerbate income inequality by generating jobs and producing goods that primarily benefit the richest portion of the population.
B	Transnational corporations limit the transfer of patents, industrial secrets, and other technical knowledge to local subsidiary.
C	Growth is concentrated; investment in infant industries is neglected.
D	Multinational corporations repatriate profits and restrict exports by a subsidiary when they undercut the market of the parent company, which worsens a country’s balance of payments.
E	Multinational corporations require the subsidiary to purchase inputs from the parent company even when domestic supplies are cheaper.
F	Labor-saving technology increases unemployment.
G	Multinationals often demand tax concessions and subsidies, and what is more they can evade taxes by overpricing inputs transferred from another subsidiary or underpricing outputs sold by the multinational to another country.
H	Multinationals introduce inappropriate products, technology, and consumption patterns (Nestle infant formula).

C. Owing to a possibility of pernicious aftereffects of the global players’ activities these organizations are facing severe criticism. According to the data given below, guess what the grounds for the criticism are. An example is given.

Data on the activities of multinationals		Grounds for criticism
1.	The WTO makes decisions by “consensus” among its members rather than by voting. In practice this means that the rich nations band together and negotiate policies which they then impose on other member states. The WTO tradition is to present various deals as a fait accompli that other countries must accept if the multilateral trading system is to survive. In practice, this would mean that many smaller developing countries (the majority of the WTO’s members), that have been excluded from the negotiations, could be forced into accepting a deal that could wreak havoc on their economies and the environment and undermine their democracies. All decisions at the IMF and World Bank are taken on the basis of “one dollar one vote”, which guarantees the world’s richest countries an inbuilt majority.		International organizations are undemocratic.
2.	The rules of international organizations like the WTO are written by and for corporations with inside access to the negotiations. International organizations sign treaties that facilitate fiscal cross-border operations and reduce tariff barriers aiming to support domestic producers. In reality only multinational corporations benefit from such agreements as local companies aren’t competitive on the global market. The WTO has become the vehicle for liberalisation, with the multinationals at the wheel. It has the power to punish governments who “interfere” with free trade, leaving the field wide open for multinationals in pursuit of profit. The WTO agreement on intellectual property rights (TRIPs) also benefits corporations. It imposes strict rules protecting patents, copyrights and trademarks – most of which are held by multinationals. This increases the monopoly control some multinationals have, preventing local firms from developing similar products. It also allows multinationals to own rights to the use of plants and natural derivatives, like the natural pesticide from the Neem tree, which has been used for hundreds of years by farmers but has now been patented by a US corporation.
3.	Workers in poor countries may have to work 12 hours a day, seven days a week with few protections for health and safety. In some countries, globalization leads to the exploitation of child, and prison labour. The rules of international organizations don’t protect workers’ rights to organize, which leads to workers’ exploitation and lack of defense by trade unions. For example, a woman who sows a $200 Liz Claiborne jacket in El Salvador is paid just 74 cents. In the US, the labour cost to sew a garment is typically 10 per cent of the retail price. Coca-Cola is said to be one of the most discriminatory employers in the world. In the year 2000, 2,000 African-American employees in the U.S. sued the company for race-based disparities in pay and promotions. In Colombia, the IMF complained in January 2003 that labor market reforms do "not go far enough" because the minimum wage is still indexed to the cost of living. Even for Germany, the IMF has recommended “wage moderation”, an “aggressive elimination of spending on active labor market policies” and reduced unemployment benefits.
4.	Multinational and intergovernmental organizations promoting trade consider environmental protections to be “barriers to trade”. Some countries’ officials are bribed to give permissions to fell rainforests, to use cyanide heap leach technology for mining, to increase the amount of GMO seeds in agriculture. The petrochemical company Chevron left more than 600 unlined oil pits in pristine northern Amazon rainforest and dumped 18 billion gallons of toxic production water into rivers. The toxic crude oil and formation water seeped into the subsoil, contaminating surrounding freshwater and farmland. As a result, local communities suffered severe health effects, including cancer, skin lesions, birth defects, and spontaneous abortions. It is known that the WTO is negotiating an agreement that would eliminate tariffs on wood product, which would increase the demand for timber and escalate deforestation.
5.	International organizations like the WTO are responsible for violating national and individual independence by promoting mass homogeneity, sameness, and standardization which erases individuality, specificity and difference. Mass consumption of standardized goods brought up by international trade and Foreign Direct Investment in cultural and other sectors may be seen as negative because it crowds out self-produced, traditional and locally manufactured goods and services or tends to reduce the perceived value of these goods to their so-called “pure” market value. The growth of sameness and a presumed loss of cultural autonomy is viewed as a form of cultural imperialism of international organizations and multinational corporations. Companies like McDonald’s popularize similar patterns of consuming food all over the world. MTV, the television rock music station, was launched in 1981 when it reached 1.5 million householders. By 1991 it reached 201 million householders in 77 countries, across 5 continents. Given the global reach of MTV and the nature of popular music, this example might be regarded as a good illustration of cultural homogenization.
6.	The IMF and World Bank practice ideological interference and determine development paths of countries. WTO rules mean that governments are not allowed to “interfere” with trade. Increasingly this is being interpreted to mean that governments cannot even make normal domestic policy if it might have an impact on an overseas company wishing to sell its goods. Even government rules to protect the health of their citizens have come under attack. The processes of apartheid – declared a crime against humanity by the United Nations in the 1960s – witnessed close collaboration between foreign corporations including mining, banking, technology, automotive and energy corporations such as Fujitsu Ltd, Barclays, IBM, Daimler AG and the Ford Motor Company among others, intentionally financing, aiding and abetting the regime, in exchange for access to natural resources such as gold and diamonds, and deliberately cheapened human resources or labour. The reasoning – business as usual – was quickly justified by corporations such as Ford who stated, “Why are we in South Africa? We would not be there were there not an opportunity to make a profit.”
7.	Free trade pitches powerful rich countries against the Third World. Developing countries are prohibited from nurturing their industries in the way that industrialised countries did during their own development. The significant impact on power disparity is due to the profits extracted by the multinationals that take over developing country systems. For example, the 20% of world’s richest population devour 86% of world’s natural resources while the 80% of the underprivileged are left with 14% of the resources. Global trade rules, and especially International Monetary Fund and World Bank conditions, have required developing countries to remove tariffs on agricultural imports. That has left them vulnerable to accepting the international market price – even if it is the product of a rigged system, and even if it impoverishes the countries’ farmers and drives them out of their livelihoods. One of the World Bank’s present fads is water privatization. Clean drinking water is a basic need for survival, but widely unavailable in poor countries. Privatization in water and sanitation has led to much higher fees, sometimes overnight and sometimes with disastrous consequences. Diarrhea kills more than a million children a year in developing countries, simply because their families lack access to clean drinking water.