Globalization Transnational Corporations Multinationals Case Study: Food

Transnational Corporations ► Transnational (or Multinational) Corporations are businesses with their headquarters in one country but has branch plants elsewhere. Many of these are among the largest companies in the world. “Transnationals are usually more wealthy than their host countries.” -- Dr. Tony Clarke

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

Transnational Corporations Examples Microsoft Nokia Toyota Coca-Cola

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

► Of the 100 largest economic units in the world, about 1/2 are MNC’s ► In 1950, there were 990 MNC’s in the U.S., today there are more than 10,000 ► Ford executive “it is our goal to be in every single country there is. We at Ford Motor Company look at a world map without any borders”

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

Characteristics of an Oligopoly 1. Each member produces a significant share of the market 2. seek stability in markets 3. seek to maintain high barriers of entry to prevent new firms from upsetting stability

Why MNC’s Target the LDC’s ► Cheaper labour rates ► few labour protection laws ► often offered grants of money

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

The transnationals advocating globalization belong to three groups: ► Large manufacturing corporations (for example Nike, Mattel, Sony) that produce goods in countries that offer the lowest wages and best tax incentives, and sell their goods around the world ► Banks (HSBC, RBC, etc.) that sell their financial services around the world. This is the process of financialization (the increasing flow of money, as opposed to goods and services, between nations), that usually increases the wealth of the elites, while taking it from the hands of ordinary citizens.

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

Globalization has occurred via 2 processes… ► It has made culture increasingly international in nature, and ► It has increased the concentration of wealth into the hands of the world’s elite.  This has allowed the dominant cultures of the West to dominate most other nations, and created a greater gap between the worlds rich and poor.  Social Scientists, particularly anthropologists, pay close attention to how globalization is affecting the world’s impoverished populations, and speculate on how globalization can be used to solve some of the world’s problems, rather than exacerbate them.

Transnational Corporations – The Good and the Bad Positive Aspects ► Host country becomes more wealthy ► Increasing capital, technology, and skills ► Jobs ► Introduce new technologies ► Increasing trade ► Education/training

Negative Aspects ► Because they locate in different countries, they can often escape the regulations of individual nations ► Uneven development (rich get richer….) ► Trans-nationals can influence the governments of nations and can interfere with the freedom of a people to choose their own governments (powerful interest groups) ► Their vast wealth gives them the power to influence media, and control the spread of information.

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

Genetically Modified Organisms

There’s a big difference…. ► Between conventional breeding and GMOs ► Conventional breeding transfers genetic information between members of the same species ► Genetic engineering overcomes 3 billion years of evolution to transfer genes between unrelated species. (ex. A potato may carry the gene that stops a fish from freezing)

There’s a big difference…. ► Many GMOs come from one of a few huge transnational corporations, like Monsanto ► These companies have “patents” on actual new species they’ve created (playing God?) ► Seed varieties often contain a “suicide gene” which prevents plants from breeding and re- growing from one year to the next

$$$$ ► This results in increased profits for the TNC while at the same time increasing the dependency on the company for the desired seeds ► What should be free becomes prohibitively expensive for farmers

Advantages  Seed varieties that have desired traits (increased yield, drought resistant, insect resistant…)  Huge profits for the GMO companies  Feeding more people Disadvantages  Dependency on companies for something that should be free  Cost is prohibitive for the many millions of peasant farmers around the world

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

FOOD INC. ► yeshowcase/2010/foodinc/ yeshowcase/2010/foodinc/ yeshowcase/2010/foodinc/