GlobalizationGlobalization

Transnational CorporationsTransnational Corporations

MultinationalsMultinationals

Case Study: FoodCase Study: Food

Transnational Transnational CorporationsCorporations

►Transnational (or Multinational) Transnational (or Multinational) CorporationsCorporations are businesses with their are businesses with their headquarters in one country but has headquarters in one country but has branch plants elsewhere. Many of these branch plants elsewhere. Many of these are among the largest companies in the are among the largest companies in the world.world.

““Transnationals are usually more wealthy than their host Transnationals are usually more wealthy than their host

countries.”countries.” -- -- Dr. Tony ClarkeDr. Tony Clarke

AKA: Multinational...AKA: Multinational...

►A corporation with its A corporation with its headquarters in one country, headquarters in one country, usually the U.S. or Western usually the U.S. or Western Europe, and branch plants across Europe, and branch plants across the worldthe world

Transnational CorporationsTransnational Corporations

ExamplesExamples

MicrosoftMicrosoft

NokiaNokia

Toyota Toyota

Coca-ColaCoca-Cola

►MNC’s are usually owned by MNC’s are usually owned by stockholders, but there are a few stockholders, but there are a few that are owned by governmentsthat are owned by governments

►Of the 100 largest economic units in the Of the 100 largest economic units in the world, about 1/2 are MNC’sworld, about 1/2 are MNC’s

►In 1950, there were 990 MNC’s in the In 1950, there were 990 MNC’s in the U.S., today there are more than 10,000U.S., today there are more than 10,000

►Ford executive “it is our goal to be in Ford executive “it is our goal to be in every single country there is. We at every single country there is. We at Ford Motor Company look at a world Ford Motor Company look at a world map without any borders”map without any borders”

►Most MNC’s are oligopolistic in Most MNC’s are oligopolistic in structure, where only a few large structure, where only a few large companies dominate an industry companies dominate an industry [oil and gas companies][oil and gas companies]

Characteristics of an Characteristics of an OligopolyOligopoly

1.1. Each member produces a Each member produces a significant share of the marketsignificant share of the market

2.2. seek stability in marketsseek stability in markets

3.3. seek to maintain high barriers of seek to maintain high barriers of entry to prevent new firms from entry to prevent new firms from upsetting stabilityupsetting stability

Why MNC’s Target the LDC’sWhy MNC’s Target the LDC’s

►Cheaper labour ratesCheaper labour rates►few labour protection lawsfew labour protection laws►often offered grants of moneyoften offered grants of money

►Tax Holidays may be used to Tax Holidays may be used to attract a company. This means attract a company. This means that a government exempts a that a government exempts a corporation from taxes for a corporation from taxes for a certain period after it establishes certain period after it establishes a plant in a countrya plant in a country

The transnationals The transnationals advocatingadvocating globalization belong to three globalization belong to three

groups:groups:► Large manufacturing corporations Large manufacturing corporations (for example (for example

Nike, Mattel, Sony) that produce goods in Nike, Mattel, Sony) that produce goods in countries that offer the lowest wages and best tax countries that offer the lowest wages and best tax incentives, and sell their goods around the worldincentives, and sell their goods around the world

► BanksBanks (HSBC, RBC, etc.) that sell their financial (HSBC, RBC, etc.) that sell their financial services around the world. This is the process of services around the world. This is the process of financialization (the increasing flow of money, as financialization (the increasing flow of money, as opposed to goods and services, between nations), opposed to goods and services, between nations), that usually increases the wealth of the elites, that usually increases the wealth of the elites, while taking it from the hands of ordinary citizens.while taking it from the hands of ordinary citizens.

► International Government International Government Organizations Organizations (UN, WTO, World Bank, (UN, WTO, World Bank, IMF) – these organizations play key IMF) – these organizations play key roles in promoting globalizationroles in promoting globalization

Globalization has occurred via 2 Globalization has occurred via 2 processes…processes…

► It has made culture increasingly international in It has made culture increasingly international in nature, and nature, and

► It has increased the concentration of wealth into It has increased the concentration of wealth into the hands of the world’s elite. the hands of the world’s elite. This has allowed the dominant cultures of the West to This has allowed the dominant cultures of the West to

dominate most other nations, and created a greater dominate most other nations, and created a greater gap between the worlds rich and poor. gap between the worlds rich and poor.

Social Scientists, particularly anthropologists, pay Social Scientists, particularly anthropologists, pay close attention to how globalization is affecting the close attention to how globalization is affecting the world’s impoverished populations, and speculate on world’s impoverished populations, and speculate on how globalization can be used to solve some of the how globalization can be used to solve some of the world’s problems, rather than exacerbate them.world’s problems, rather than exacerbate them.

Transnational Transnational Corporations – The Good Corporations – The Good

and the Badand the BadPositive AspectsPositive Aspects►Host country becomes more wealthyHost country becomes more wealthy► Increasing capital, technology, and Increasing capital, technology, and

skillsskills► JobsJobs► Introduce new technologiesIntroduce new technologies► Increasing tradeIncreasing trade►Education/trainingEducation/training

Negative AspectsNegative Aspects

► Because they locate in different countries, they can Because they locate in different countries, they can often escape the regulations of individual nationsoften escape the regulations of individual nations

► Uneven development (rich get richer….)Uneven development (rich get richer….)► Trans-nationals can influence the governments of Trans-nationals can influence the governments of

nations and can interfere with the freedom of a nations and can interfere with the freedom of a people to choose their own governments (powerful people to choose their own governments (powerful interest groups)interest groups)

► Their vast wealth gives them the power to influence Their vast wealth gives them the power to influence media, and control the spread of information.media, and control the spread of information.

►Remove local resources to Remove local resources to factories of developed nations. factories of developed nations. When a corporation exploits a When a corporation exploits a country for its own interests in a country for its own interests in a way that are against that way that are against that country’s national interests, it is country’s national interests, it is known as known as neocolonialism neocolonialism

Genetically Modified Genetically Modified OrganismsOrganisms

There’s a big difference….There’s a big difference….

►Between conventional breeding and GMOsBetween conventional breeding and GMOs

►Conventional breeding transfers genetic Conventional breeding transfers genetic information between members of the information between members of the same speciessame species

►Genetic engineering overcomes 3 billion Genetic engineering overcomes 3 billion years of evolution to transfer genes years of evolution to transfer genes between unrelated species. (ex. A potato between unrelated species. (ex. A potato may carry the gene that stops a fish from may carry the gene that stops a fish from freezing)freezing)

There’s a big difference….There’s a big difference….

►Many GMOs come from one of a few huge Many GMOs come from one of a few huge transnational corporations, like transnational corporations, like MonsantoMonsanto

►These companies have “patents” on actual These companies have “patents” on actual new species they’ve created (playing God?)new species they’ve created (playing God?)

►Seed varieties often contain a “suicide Seed varieties often contain a “suicide gene” which prevents plants from breeding gene” which prevents plants from breeding and re-growing from one year to the nextand re-growing from one year to the next

$$$$$$$$

►This results in increased profits for the This results in increased profits for the TNC while at the same time increasing TNC while at the same time increasing the dependency on the company for the dependency on the company for the desired seedsthe desired seeds

►What should be free becomes What should be free becomes prohibitively expensive for farmersprohibitively expensive for farmers

AdvantagesAdvantages Seed varieties that have desired traits Seed varieties that have desired traits

(increased yield, drought resistant, insect (increased yield, drought resistant, insect resistant…)resistant…)

Huge profits for the GMO companiesHuge profits for the GMO companies Feeding more peopleFeeding more people

DisadvantagesDisadvantages Dependency on companies for something Dependency on companies for something

that should be freethat should be free Cost is prohibitive for the many millions of Cost is prohibitive for the many millions of

peasant farmers around the worldpeasant farmers around the world

Solutions?Solutions?

► Breeding your own desired seeds, the old Breeding your own desired seeds, the old fashioned way (Monsanto claims their fashioned way (Monsanto claims their seeds are still superior, but there’s proof seeds are still superior, but there’s proof otherwise)otherwise)

FOOD INC.FOOD INC.

►http://www.cbc.ca/documentaries/passionateeyeshowcase/2010/foodinc/