Multinationals And Globalization Term paper

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Multinationals and Globalization

Before one dwells more into the issue of globalization, one must first understand the meaning of it. The term means almost the very opposite to what it suggests. Global seems to mean universal, transcending national boundaries, and this implies a notion of good will, co-operation and unity. But in reality, what globalization means is that the frightening power of major corporations such as Nike, Sony, McDonald s etc, are taking over a country s natural resources, manufacturing, finance and cultural or entertainment undertakings all for their personal wealth. These multinationals are growing at a rapid pace as shown in figure 1 (the annual number of multinationals have doubled between the years 1992 and 1997). In some cases, these large companies are actually worth significantly more than the countries themselves (see figure 2). These giants or multinationals today control the economy of many nations, including Canada and many developing nations, thereby controlling the political destiny of the countries themselves. The main points of globalization stated in the book Globalization, Democratization, Multilateralism include:

1) THE RULE OF THE MARKET. Liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers' rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say "an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone." 1

2) CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply -- again in the name of reducing government's role. Of course, they don't oppose government subsidies and tax benefits for business 2 .

3) DEREGULATION. Reduce government regulation of everything that could diminish profits, including protecting the environmental safety on the job 3 .

4) PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs 4 .

5) ELIMINATING THE CONCEPT OF "THE PUBLIC GOOD" or "COMMUNITY" and replacing it with "individual responsibility." Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as "lazy." 5

By completely centralizing the world s local economies into a global economy through multinationals, country s local economies and industries are being decimated, their environment is also being destroyed and would increase the exploitation of workers in sweatshops.

As was stated before, greedy corporations or multinationals are simply ravaging local industry and businesses of underdeveloped countries. Once the multinational moves in, many problems arise since they are being backed by international cartels. Take for example an airplane company known as Air India, which is the country's government-run international airline. AI has been subject to foreign cartel pressure, and the airline's market share in the country's international traffic is now down to 16 percent 6 , far below Lufthansa and British Airways. Baldev Raj Nayar of McGill University, in Montreal, Canada, has just completed a study of aviation in India that finds that the government has discriminated against Air India in favor of foreign airlines. Similarly, the government could have rationally regulated domestic aviation while reforming Indian Airlines (IA), the domestic public sector carrier known for its poor service, and dismantling its monopoly. Instead, the government allowed fly-by-night operators to come in, form a cartel, grab the most profitable routes from IA and indulge in predatory pricing. Once these operations move in, they basically take over the country s market share within that industry. The result of this is complete and total job loss.

As Indian industry has weakened, approximately 200,000 workers have lost their jobs, some 125,000 workers in the industrial portion of the public sector alone 7 . In response to these heavy structural adjustment costs, the government promised a comprehensive program to build a "safety net." The government set up a World Bank-financed National Renewal Fund (NRF), to retrain workers and to create alternative employment and develop new technologies. But the NRF is no more than an inefficient means of financing voluntary retirement schemes for relatively small numbers of workers 8 . A study by the Maniben Kara Institute of Labor Studies in Bombay has found that only half of the workers laid off under the NRF program find new employment. The others simply join the ranks of the 20 million to 25 million people who are still unemployed 9 .

Also the environment has suffered the same fate due to the overwhelming power of multinationals. Many countries have been dumping industrial waste in the lap of underdeveloped countries again, due to the multinationals. Take for example, India. India is quickly turning into a major dumping ground for the North's wastes. According to Greenpeace, India imported 5 million kilograms of metal waste and 2.85 million kilograms of metal scrap from Australia in the first half of 1994. Last year, Australia exported 346,000 kilograms of used lead-acid batteries to India, almost three times what it exported in 1992. India imported 74,000 kilograms of plastic waste in 1993, almost 25 times the amount imported in 1990. India also receives huge quantities of toxic waste from the United States, Canada, Germany and Britain. In 1993 alone, the United States shipped more than 7.8 million kilograms of plastic waste, 26.8 million kilograms of tin waste, 917,000 million kilograms of lead ash and 14,500 kilograms of lead-acid batteries to India. From January to May 1993, Britain shipped India 250,000 kilograms of ash, 2.5 million kilograms of copper waste and 500,000 kilograms of lead waste, plus 1.1 million kilograms of other metal wastes. Canada contributed 960,000 kilograms of copper waste, a million kilograms of lead waste and 106 million kilograms of copper waste in 1992. Not to be outdone, the U.S. exports of scrap metal to India weighed 1.7 billion kilograms in 1990. A year earlier, Germany sent India 2 million tons of metal wastes. Another concern for the environment are big chemical-creating factory disasters. The worst industrial disaster of this century was...

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