An Unconventional Introduction to Economics By: Diane Coyle Sex, Drugs & Economics
“Multinationals: Sweatshop Earth?” By: Kyle Bohland A Synopsis of Chapter 17
Authors Opinion Multinational corporations are easy, but wrong to condemn for labor practices used in developing countries Attention has forced multinationals to pay much closer attention to working conditions in developing countries Basis of argument is that companies are becoming more powerful, but not true
Authors Opinion Two aspects in explaining the “demonization” of multinational corporations: Growth of international investment and sales by corporations Impact of a more open world economy on governmental policies
Authors Opinion Investment from one country to another $30 billion in early 1980’s $800 billion in 1999 Proportion of exports in developing country exports to the United States that are exports: 47% in % in 1998 Conclusion: companies are transferring production overseas
Authors Opinion Why are companies transferring overseas? Get away with paying very low, exploitation wages? Labor cost do make up about 2/3 of total cost of manufacturing some low-tech goods Get away from environmental standards? Companies opt for middle income countries, not low income countries
Authors Opinion Conditions in factories own by multinational companies are almost always better than the local conditions Many jobs are taken by women and promote independence Children do not go back to school if cheap labor is not needed Child labor is not desirable, but often better off than their alternative, like prostitution
Authors Opinion Corporations have brought more jobs, money, technology, exports, and prosperity to developing countries Often much better than what a corrupt government could achieve
Conclusion Globalization has positive outcomes and negative Governments and corporations have both gained and lost power in some opportunities No clear conclusion to whether net outcome is positive and negative Can only work for the future to improve on the past and present