Topic 3: Agencies of Dev (TNCs)

Question 1

What are transnational corporations?

Answer 1

Corporations that have globalised their operations: they produce and sell around the world, whilst using global supply chains.

Question 2

What are Export Processing Zones?

Answer 2

EPZs are areas in developing countries where the normal workplace regulations etc are relaxed to encourage TNC investment.
A lot of developing countries actively seek investment.

Question 3

What is the neoliberal view of TNCs?

Answer 3

They are essential for development: they create wealth, create jobs, spread western values and kickstart economies.
Accompanying abuses are painful but necessary - compare it with 19th century Britain.

Question 4

How do dependency theorist differ from neoliberals surrounding TNCs?

Answer 4

They concentrate on the abuses.
They exploit poorer nations and people, intensifying dependency, keeping them poor. “Sweatshops of the world”.
They weaken workers and strengthen capitalism.

Question 5

What are some of the benefits of TNCs? (4)

Answer 5

1. They encourage intl trade and investment - leads to a more developed economy and opens up new markets.
2. Provide opportunities for women - promotes gender equality.
3. Bring modern values which may aid dev - eg, gender equality.
4. TNCs will pay for infrastructure - local eople will benefit from this.

Question 6

What are the costs of TNCs?

Answer 6

1. Exploit workers: child labour, trade unions aren’t allowed, poor conditions and pay. Investment goes to those who will accept the lowest wages/benefits/conditions - “race to the bottom”.
2. Exploit the environment: Use up renewable resources, damage ecosystems, and cause much pollution.
3. Profits don’t stay in the country - host country doesn’t benefit financially (they avoid tax).
4. Products are exported to the West - local people are unable to buy them.

Question 7

How come TNCs are able to act in unethical ways? (5)

Answer 7

a) How and whom to punish?
b) Global economic influence
c) Whose legal system?
d) Regional economic influence
e) Parent-subsidiary relationship.

Question 8

a) How and whom to punish?

Answer 8

• If punished, fines are tiny and often the cost is passed on to consumers - price increase.
• Who, at what level, is responsible?
  If a chief exec resigns, they will be replaced by a carbon copy - resignation as jail for corporate crimes is rare.

Question 9

b) Global economic influence

Answer 9

• Some TNCs are more powerful than developing nations - able to put pressure on individual countries + IGOs.
  Eg, WTO rules allow TNCs to patent meds that have been in dev countries for generations - these meds should belong to the people.

Question 10

c) Whose legal system?

Answer 10

Where can a TNC be prosecuted?

- They might be breaking a law in their country but not in the developing country. Eg, child labour.

Question 11

d) Regional economic influence

Answer 11

Due to the power they hold, they can blackmail govts into overlooking what they do.

Question 12

e) Parent-subsidiary relationship

Answer 12

• TNCs often operate through smaller, subsidiary companies.
• In court cases, the subsidiary is prosecuted.
  The TNC is protected financially and in terms of publicity.
  Eg, Nike claims to not know of child labour or malpractice in factories they don’t own.

Question 13

What are some helpful examples?

Answer 13

Nike
Sony
Apple