Global Economy and the Environment

As the global economy gets integrated, national or local corporations
will gradually transform in to a multinational corporation (MNC). When this
type of development occurs, the host countries are usually the ones that become
the immediate stake holders. This is because when a MNC sets its foot into a
host country, there are economic, political, social and environmental impacts
that result from their corporate actions. In many cases, it is certainly
possible that it can end up in a win-win situation, if the host country and the
MNCUs both work mutually. However there have been unfortunate examples, where
this has not been the case.

In general, international agreements have its advantages, due to the
fact that we can harmonize international standards. Therefore environmental
concern is one of the key issues that the policy makers and MNCUs should set a
high priority on. This is because growth and development is strongly correlated
with environmental degradation. Furthermore, it is fair to say that the MNCUs
are more likely to have a more harmful environmental impact from growth and
development, as opposed to the local corporations. This is because MNCUs may
not be as knowledgeable as local corporations in resource utilization and land
management. This also refers to the notion of Rthe locals know their land
better than anybody elseS. The tropical rain forest of Brazil is a good example
of this. The RindigenousS or the local people have a good understanding of how
to extract and utilize its resources in a very sustainable manner. However when
a multinational timber company comes into Brazil, result of their actions will
probably be more harmful, due to the fact that they are not complying to the
RtraditionalS methods.

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Another important aspect is the fact that in any international trade
agreement, a MNC is most likely going to shift their production to a lesser
developed country. This is because LDCUs are a good target for cheap labor and
low start-up costs. In Robert PastorUs essay, he mentions the term
maquiladoras; Rcheaper labor that allows them (Mexicans) to assemble parts,
import from the U.S. and then reexport the assembled productsS. In places such
as the maquiladoras, safety standards are not as rigid and this puts the local
workers in a serious health risk. The Rblack lungS case is an example where
miners in Latin America contracted respiratory diseases from working at unsafely
regulated coal mines. Since it was in a lesser developed country, occupational
health standards were lower than the usual. The Union Carbide incident from
Bhopal, India is another example, where the explosion took place due to lack of
safety and precautionary measures. Many experts have commented that the Union
Carbide incident could have been completely avoided, if the plant was located
elsewhere, in a more developed country, where they have more strict standards.

So there is a need for universal standard on these types of issues. Unless this
is achieved, the LDCUs would be placed in a vulnerable situations as more and
more MNCUs will take advantage of this.

When MNCUs come into a host country, this increases their revenue and
their GDP. However this does not necessarily mean that everyone benefits from
it. This is especially the case in the most third world countries. The benefits
usually go to the elites or sometimes to the ones living a more urbanized areas.

This disrupts the level of equality as the few rich individuals get richer and a
great number of poverty stricken individuals get poorer. This also increases
political corruption. A good example of this is the case in Brazil with the
discovery of oil in the late 1960Us. The level of corruption resulted in an
unprecedented amount of national debt, leaving them worse off then before. In
addition the Brazil suffered a great deal of environmental and resource
degradation as a result of unsound environmental activities from the MNCUs . As
Walter Reid puts it, there a need for Rgovernments to have a responsibility to
invest a share of the national benefits in rural developmentS.

Most free trades also make it more difficult to push a political
agenda. Major power such as the U.S. use economic sanctions on other countries
to enforce their political agenda. Not too long ago, the French government was
engaged in funding for nuclear testing. Most U.N. officials as well as the U.S.

were outraged by the fact that France was not complying with the international
arms agreement. As you know nuclear testing not only encourages the
international arms race, it also has a detrimental effect on the global
environment. However, because U.S. was engaged in a heavy free trade with
France, this made it more difficult to impose an economic sanction. So there is
also a need for more serious political considerations, when being engaged in a
free trade. In this case, the Department of Commerce should have carefully
reexamined the political and military criteria, before a high level of free
trade took place between the U.S and France.

But as the world becomes more integrated socially and economically,
the idea of expanding the international trade will have numerous benefits, if
they are carried out in an RappropriateS manner. After all, free trade promotes
transfer of living in LDCUs as well as improving economic efficiency. This also
allows increase in efficient use of natural resource, which can have numerous
environmental benefits. NAFTA is a good example of an environmental success
where the U.S. EPA and MexicoUs SEDESOL worked closely together to achieve
common environmental goals. Free trades can serve as an instrument that can
increase international cooperation. However it can have an enormous unintended
consequences. Therefore there is a need for more scrutiny in the decision
making process.

Category: Social Issues


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