Three Levels of Interventions: MNCs & TNCs

At the grassroots level popular consumer movements need to be organized to take care of the challenge of facing this unequal contest. MNCs need to be influenced to conduct social research related to the host countries’ problems and to contribute certain portions of their profits to social sector development particularly education and human resource development in the host societies. This is one level of intervention.

The other stage of intervention relates to governments, both at local and global levels. The host countries should legislate according to the local needs ensuring that benefits and burdens are evenly distributed with a bias to favor lower- income groups; Asia Pacific Human Development Report outlines an agenda that emphasizes among others: investing for competitiveness, adopting strategic trade policies, restoring a focus on agriculture, combating jobless growth, preparing a new tax regime and persistence with multilateralism.

The issue needs to be addressed at the global level by UN and its relevant (like UNCTAD and other) agencies. It is however an uphill task. The experience so far has not been very encouraging. In the 1970s and into the 1980s, LDCs used the UN as a forum in which they could call for a New International Economic Order, with economic power and technology transfer from multinationals to developing countries. The UN Center on Transnational Corporations (CTC) did important investigative work on the multinational corporate control over different industries, and advised Third World governments on how to negotiate with multinationals. And for more than 15 years, the CTC oversaw negotiations of a Code of Conduct for Transnational Corporations - an effort sabotaged and ultimately stifled by the United States on behalf of multinationals. Now, in another sign of the UN's transformation, the CTC has been merged into another UN agency, which tries to promote corporate investment in developing countries. UN officials are now embracing partnerships with multinationals47 in part out of frustration with the considerable failure of development efforts over the past several decades and in part because they think they have no choice.

Despite difficulties it however needs to be made clear that in the long run, there should be a global strategy to chalk out a comprehensive program of moving towards a healthy competition by removing the present inequalities. Indeed this is possible if businesses start creating value not only for shareholders but for the society and the ecology. The UNCTAD Trade and Development Report 2006 rightly emphasizes that a global partnership for development will be incomplete without an effective system of global economic governance. Such a system should take into account the specific needs of developing countries. At the same time it should ensure the right balance between sovereignty in national economic policy-making on the one hand, and multilateral disciplines and collective governance on the other.

Khalid Rahman

Source: Essays on Muslims and the Challenges of Globalisation, Institute of Policy Studies, Islamabad. Republished with permission.