Taming the New Multinational Beast
Multinational Monitor September 1997
The hydra-headed multinational corporation monster has sprouted
a new head. It is the head of the Third World-based multinational
This new breed of the beast most frequently originates in
Asia, in the Tiger economies of South Korea, Taiwan, Hong Kong
and Singapore, and also in Malaysia and Indonesia. But it can
also be traced to South Africa-where the official end of apartheid
has freed it from a caged existence- Brazil, Mexico and other
In their home countries, these multinational monsters have
grown fat from a steady diet of state subsidies, discount resource
concessions, repressed labor, protection from foreign challengers
and corrupt relations with government officials. To varying degrees,
they have also prospered through displays of entrepreneurial skill
and managerial ingenuity.
As they have grown, so have their appetites. Now they are
foraging throughout the Third World, feeding on Amazon rain forests,
minerals in Central Africa, cheap labor from China to Central
America-and looking for more.
The emergence of these New Multinationals is in some sense
a tribute to the effectiveness of economic protectionism. Unfortunately,
in building up economic power, the governments of the middle-income
Third World countries did not make meaningful efforts to democratize
their economies. The corporations they grew were able to amass
tremendous concentrated power. Nor did the New Multinationals'
home countries impose meaningful restraints on the new companies.
The New Multinationals' executives maintain close and often corrupt
ties with government officials. Those policymakers and government
bureaucrats operating in good faith have not had time or the resources
to build up expertise in regulating corporations. And authoritarian
governments suppressed popular movements that could have developed
into countervailing influences to offset the power of the new
The bottom-line result: the New Multinationals emulate the
most predatory practices of industrialized country multinationals.
In their home countries, they grew rich by under paying employees,
exposing workers to dangerous conditions, polluting the environment,
clearcutting forests and dumping untreated mine wastes. To some
extent, and varying by country, they are continuing these practices
in their home countries. But in the Tiger economies, wages have
finally risen too high for labor-intensive factories to compete
with lower-wage countries. And in countries like Malaysia, primary
forest cover is so diminished that the timber companies can no
longer satisfy their appetites there.
In response, and again following the example of industrialized
country corporations, the New Multinationals are increasingly
going global. And they too are demonstrating that-no matter how
ruthless their practices at home- they can exploit workers and
the environment beyond their own borders with even greater intensity.
This poses enormous challenges to those committed to reining
in corporate power. The New Multinationals are not based in the
United States or other countries with comparatively well-developed
corporate accountability movements, which means they are immune
to many of the protest tactics that have been successful in at
least partially reforming corporate practices. Many of the New
Multinationals, at least for now, are relatively unconcerned about
their image. Their close relationships with home country government
officials protects them from government sanction. They typically
do not rely on brand names or sell consumer goods in industrialized
countries, shielding them from consumer boycotts. And they enjoy
multinationals' usual powers: huge leverage over poor country
governments and workers, host country governments without the
capacity to regulate them and advantages flowing from control
of capital and technology.
Increasingly, crusaders for social and environmental justice
are going to have to grapple with the New Multinational monster.
There are no simple formulas available to tame the beast, but-in
addition to the obvious need for labor unions, strong government
regulations and citizen movements in host countries-there are
some promising strategies and approaches available.
First, industrial buyers-who often are vulnerable to pressure
from consumers in industrialized countries-can be held responsible
for the activities of their suppliers. Labor rights campaigns
have successfully used this approach against shoe and apparel
makers, many of which contract with New Multinationals. Brazilian
anti-child labor campaigners have gone further, seeking to hold
corporations responsible for all items in the "chain of production."
This concept can easily be extended to address environmental concerns.
Second, corporate accountability groups are beginning to evolve
in the New Multinationals' home countries. Groups like the People's
Solidarity for Participatory Democracy in South Korea and the
International Labor Resources and Information Group in South Africa
are beginning to monitor the overseas operations of their countries'
multinationals, and to develop pressure strategies.
Third, the challenge of the New Multinationals points to the
importance of reviving the efforts to adopt and implement an enforceable,
global code of conduct for multinational corporations. None of
these approaches is likely to have immediate success in taming
the New Multinationals. But the growing importance of these companies,
and the immunity of the companies to many traditional pressure
tactics, make more modest and close-at-hand strategies doubly
inadequate. It is time to think in terms of bold and far-reaching
Corporations & the Third World