Social Capital and Multinationals

We live in world of rising concern about the contribution of multinationals to society. Naomi Klein’s (2000) No Logo and Noreena Hertz’s (2001) The Silent Takeover have raised the spectre of global corporations who show little concern for their effect on vulnerable host communities and who are more powerful than many of the governments that welcome them across their borders. As such multinationals are often perceived to be in the process of destroying local cultures and replacing them with homogenised western values. Multinational production methods are accused of exploiting desperate workers and having low labour and environmental standards. The process of globalisation which multinationals represent is credited with undermining the power of national governments to control their economic destiny, leaving them vulnerable to the subsequent exit of footloose capital and undermining their tax base, by promoting tax competition among governments to attract them in the first place. Even more moderate writers such as Stopford, Strange and Henley (1991) recognise that a world with increasingly significant large global firms poses a fundamental challenge for developing country governments: change national economic policies (good or bad) or lose multinational investments.