Agencies of development: TNCs 2

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  • Created by: hannah8
  • Created on: 05-05-14 14:28
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  • Why are TNCs able to act in unethical ways?
    • Global economic influence
      • Largest TNCs are more powerful than some developing countries
        • Are able to put pressure on individual countries/IGOs
        • E.g. World trade rules now allow TNCs to patent medicines/foods that should belong to developing countries
          • This is bio-piracy
    • Parent-subsidary relationship
      • TNCs often operate through smaller companies
      • When there is a court case, the smaller subsidary company is prosecuted
      • The parent TNC is protected, both financially and reputation-wise
      • E.g. Chains of clothes shops can claim to be unaware of child labour if they do not own the factories
    • Regional economic influence
      • TNCs hold power within particular countries and regions
        • Can force/blackmail governments into overlooking what they do
    • Whose legal system?
      • Where can a TNC be prosecuted?
      • TNCs might break a law in their country of origin
        • But there may not be a law in the developing country
    • How and who to punish?
      • Where TNCs/subsidaries are prosecuted for breaking regulations/laws, fines are tiny as proportions of profits
        • The cost can simply be passed onto consumers
      • Who, at what level in a TNC is responsible?
        • If a chief executive resigns, they will be replaced by someone similar


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