Just Sociology

Barriers to Making Transnational Corporations Work for Development: Overcoming Obstacles

Transnational corporations (TNCs) are business entities that operate in multiple countries, often with vast resources and global reach. While they are seen as agents of economic growth and development, TNCs have been subject to criticism for their exploitative and harmful practices.

This article explores some of the key criticisms of TNCs, including low wages, ecological decline and damage, illness and death in pursuit of profit, and the profit derived from human rights abuses. Additionally, we examine the role of TNCs in development, including their primary commitment to maximizing profit for shareholders and the positive contributions they can make to innovation, efficiency, and higher wages.

Low Wages

One of the most significant criticisms of TNCs is their use of sweatshop labor, paying low wages that fail to meet living standards. Companies such as Nike, Adidas, and Primark have been accused of exploiting workers who are forced to work in appalling conditions.

These workers, who are predominantly women and children, toil long hours for subsistence wages, often in environments devoid of basic safety measures. The implications of this type of exploitation on the physical and mental health of workers are profound.

Ecological Decline and Damage

TNCs have also faced criticism for their contribution to the ecological decline and damage, such as Coca-Cola, which has been accused of depleting water resources in the third world, leading to pollution and environmental degradation. Shell in Nigeria is another case in point, where the company has been accused of causing pollution and environmental damage through flared gas, oil spills and leakages that have resulted in the displacement of communities.

The company has often failed to take responsibility for these actions, causing significant harm to the environment and imposing hardships on affected communities.

Illness and Death in Pursuit of Profit

TNCs have been criticized for exposing workers to toxic chemicals and poor work environments, leading to chronic illness and death. Union Carbide’s disaster in Bhopal, India, where the company’s negligence and safety violations led to a gas leak that harmed over 500,000 people, is one such example.

While victims have continued to demand compensation, the company has failed to take responsibility for the incident, highlighting the human cost of the pursuit of profit over ethical responsibilities.

Profit from Human Rights Abuses

TNCs have also been accused of benefiting from human rights abuses rather than preventing them. Coca-Cola in Colombia is an example in this regard, where the Trades Union movement was targeted by right-wing paramilitary forces through violence and intimidation, often with the tacit support of the company.

The profits made by Coca-Cola in this context have come at the cost of workers’ rights and safety and have contributed to a climate of violence. TNCs’ Primary Commitment

While TNCs are often held morally responsible for their actions, they are primarily committed to maximizing profits for shareholders.

This means that they view their operations from a narrow perspective that aims to increase revenue without substantial regard for their moral obligations. Thus, when faced with the decision to raise wages or improve working conditions, TNCs may opt for profit rather than social responsibility.

Positive Contributions by TNCs

Despite these criticisms, TNCs can also contribute positively to development, such as by introducing innovative technologies and improving efficiency that leads to higher wages. For instance, TNCs invest in research and development, thereby creating new products and services that can generate revenue and create job opportunities in host countries.

Moreover, TNCs, by employing workers and investing in infrastructure and facilities, can promote economic growth and development, particularly in underdeveloped regions.

Conclusion

In conclusion, TNCs play a significant role in the global economy, but their practices are not without criticism. Sweatshop labor practices, ecological damage and decline, and human rights abuses are just a few examples of TNCs’ harmful practices.

Nonetheless, TNCs can also make positive contributions to development through innovative technologies and improved efficiency, leading to higher wages and job creation. Examining the balance between the benefits and harms of TNCs is critical in assessing their overall impact on society.While transnational corporations (TNCs) can contribute positively to development, several barriers impede their potential to do so.

These barriers include, but are not limited to, the lack of global control, global mobility of corporations, and political circles. This article expands on these three subtopics in detail.

Lack of Global Control

One significant barrier to making TNCs work for development is the lack of global control of their operations. Currently, there is no international regulation to oversee TNCs’ activities on a global scale.

The lack of regulations allows corporations to operate with limited or no oversight, leading to practices such as paying workers low wages without minimum standards. This lack of global control results in TNCs enjoying a lot of autonomy in deciding how to conduct business operations.

For instance, developing countries are well aware that TNCs rarely pay minimum wage to their workers, and many countries have resorted to setting their minimum wage requirements for TNCs. However, such minimum wages are insufficient to improve the lives of workers in the developing world. As such, the lack of global control of TNCs’ operations is a significant obstacle to making them work for the development of communities and nations.

Global Mobility of Corporations

Another significant barrier is the global mobility of corporations. TNCs are free to set up subsidiaries around the world and are often reluctant to abide by a host government’s regulations.

In turn, TNCs enjoy and exploit governments competing against each other to attract their operations with the promise of low taxes, relaxed regulation, and cheap labor. Under this system of incentives, governments may feel that they are not in a position to implement stricter regulations as it may dissuade TNCs from investing.

This global mobility and reluctance of governments to regulate the dominant corporations have a significant negative impact on their ability to make TNCs work for development. For example, as TNCs continue to move their operations to countries where labor laws are lax or do not exist altogether, communities gradually lose their bargaining power.

Additionally, TNCs tend to locate their operations near communities with lower development indicators, where people are often in desperate need of jobs, and the lack of stringent regulations only exacerbates this vulnerability.

Political Circles

The final significant obstacle to making TNCs work for development is the influence of global-political elite circles. Such elite circles wield significant power and comprise powerful politicians, corporate heavyweights, and other influential personalities.

Given that TNCs are significant contributors to governments’ revenue streams, they tend to have the ear of many politicians, often at the expense of other groups, such as small businesses and local communities. The result is that TNCs successfully lobby for policies that benefit their interests, often at the expense of the less privileged.

The power and influence accumulated by TNCs and their political allies have made meaningful regulation of their activities challenging. As TNCs’ political allies have considerable clout, regulation governing TNCs’ operations is often watered down, resulting in them not bearing the full costs of their actions.

This is especially true when governments do not have the resources or political will to face off against TNCs’ elite political circles.

Conclusion

In conclusion, there are significant barriers to making TNCs work for development. The lack of global control, global mobility of corporations, and political circles, all present significant obstacles that impede the ability of TNCs to positively contribute to development.

A lack of regulations results in inadequate labor standards, while the reluctance of governments and TNCs’ global mobility make it challenging to enforce regulations successfully. Additionally, the powerful influence of TNCs and their political allies make meaningful regulation difficult.

Addressing these obstacles is key to ensuring TNCs positively contribute to development, and all stakeholders should work together to do so. Addressing these challenges requires a collaborative effort between governments, TNCs, NGOs, and other stakeholders, with building trust and cooperation as a linchpin.

In conclusion, transnational corporations (TNCs) have significant potential to support development positively. However, this potential is challenged by several obstacles: lack of global control, global mobility of corporations, and political circles.

By addressing these challenges, stakeholders can work together to ensure TNCs’ activities are aligned with development goals. The critical task of balancing ethical responsibilities and maximizing shareholder profits requires greater collaboration, accountability, and regulation.

This article has clarified some of the main criticisms and challenges facing TNCs, starting a broader conversation on fostering sustainable and equitable TNC operations.

FAQs

1. What are transnational corporations (TNCs)?

TNCs are business entities that operate in multiple countries, often with vast resources and global reach. 2.

What are some of the significant criticisms of TNCs? TNCs have been criticized for their sweatshop labor practices, ecological damage and decline, exposing workers to toxic chemicals, and benefiting from human rights abuses.

3. How can TNCs positively contribute to development?

TNCs can positively contribute to development through innovative technologies and improved efficiency, leading to higher wages and job creation. 4.

What are some barriers to making TNCs work for development? Some barriers include the lack of global control of their operations, the global mobility of corporations, and the influence of global-political elite circles.

5. What can stakeholders do to address these challenges?

Stakeholders can work together to ensure TNCs’ activities are aligned with development goals. This requires greater collaboration, accountability, and regulation.

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