TNCs, NGOs and International Agencies

• Transnational Corporations (TNCs)


  Companies that operate across a number of countries
• Transnational Corporations


  • Their headquarters might be in a Western liberal democracy like the USA, but much of the production takes place in other parts of the world, including developing countries, and they might have operations and subsidiaries in many other countries
  • Production has tended to move to the developing world, in order to benefit from cheap labour and fewer regulations
  • This has created a new international division of labour, with manufacturing and primary sector jobs primarily taking place in developing countries
• Some of these TNCs are worth a huge sum of money-indeed they have a higher "GDP" than many nation states
• They have enormous power, but critics suggest they have very little responsibility
• Modernisation theorists and neoliberals


  They argue that TNCs perform an essential role in the process of development
• How TNCs assist the process of development

  • Offering employment opportunities in more lucrative and secure formal sectors of the economy
  • Allowing workers to enter the formal sector with more regular pay, better working conditions and an increased standard of living, thanks to an increase in their earning potential
  • Promoting the values that modernization theorists say are essential for development, such as achieved status, individualism, and universalism
• Dependency theorists


  They would argue that the employment opportunities offered to workers in the developing world by TNCs is really the worst kind of exploitation
• TNCs often base themselves in Export Processing Zones (EPZs) that are especially established to have minimal protections for workers: no employee security, no minimum wage, no healthy and safety regulations, etc.
• Dependency theorists would criticise the idea that TNCs improve the value systems in developing countries, arguing that this is a form of cultural imperialism
• Naomi Klein's book "No Logo"


  It explored the behaviour of TNCs and investigated the human stories behind the big brands
• The book paints a picture of TNCs treating people very badly and causing great harm in both the developed and developing worlds
• Non-governmental organisations (NGOs)


  Charitable organisations like OXFAM, the Red Cross or Medicins Sans Frontier (MSF) that provide emergency aid and work in developing countries over a long period of time
• Why NGOs can be more effective at providing aid and assisting development than governments


  • They are more likely to be viewed as independent
  • They work directly with the people on the ground, rather than passing on resources from government to government
  • They can respond rapidly to need and can be flexible, in a way that governments often cannot be
• Criticisms of the role of NGOs

  • Allegations of corruption and malpractice
  • Reliance on unpredictable public donations rather than secure state funding
  • Accusations of manipulating the public and over-simplifying complex situations to raise money
  • Controversy over high salaries of some NGO workers
• International agencies


  Organisations like the IMF and World Bank that offer loans to developing countries and place conditions on those loans
• Structural Adjustment Programmes (SAPs)


  • Conditions placed on IMF loans, including privatisation, deregulation, spending cuts, and focusing on exports
• Critics argue that SAPs can cause environmental damage, corruption, more poverty, and conflict in developing countries
• Joseph Stiglitz


  A World Bank chief economist and Nobel laureate who has written critically of the impact of the IMF and other international organisations, arguing that their neoliberal prescriptions often make matters worse in developing economies
• Other international organisations like the EU provide grants rather than loans, and the UN acts as a coordinator of NGOs
• The World Trade Organisation (WTO) sets the rules for international trade and has been criticised for failing to support fair trade and benefiting only the richest countries
• These international organisations are often established and funded by powerful countries that wish to maintain their power, so while they may have noble development objectives, they are also pursuing their own interests