Global Development Theme 5 - Role of Organisations

• TNCs have benefitted hugely from the trade rules established by the World Trade Organisation
• They operate in more than one country and have no clear national base
• They seek to maximise profits and reduce costs by constantly seeking out the cheapest places to manufacture their goods
• They are responsible for three quarters of global trade
• They have sufficient resources to be able to move operations around the globe

• Believe that corporations provide a number of benefits for the developing world that can help kickstart development
• Neoliberals believe that developing countries should actively encourage TNC investment by changing government policies to create favourable conditions for TNCs                                                                                             

WAYS IN WHICH DEVELOPING COUNTRIES CAN ATTRACT TNCs

• By relaxing regulations on companies 
• Privatising public services
• Free Trade Zones/Export Processing Zones offer incentives for TNCs to invest such as tax breaks, low wages and lax health and safety regulations

• Bring investment in terms of money, resources, technology and expertise 
• Creates jobs
• TNCs need trained workers which leads to improvements in education 
• Jobs provide opportunities for women which promotes gender equality
• Encourages international trade which could increase economic growth
• Wealth generated by TNC investment eventually 'trickles down' to the rest of the population

• TNCs are there to exploit natural resources and cheap labour to benefit themselves
• TNCs spreading out makes countries and workers more dependent on them
• Money that TNCs make leaves the country and the poorest often do not see the benefits                                                                                                                   

CRITICISMS OF TNCs

• TNCs exercise power without responsibility - they are programmed to exploit and dehumanise for profit
• Removal of indigenous peoples in pursuit of profit (e.g. Shell in Nigeria and RTZ in Angola) 
• Exploitation of workers (e.g. Primark and Matalan using sweatshop labour)
• Ecological damage (e.g. Coca Cola in Kerula)
• Death and Illness (e.g. Union Carbide in Bhopal)
• Destroying local businesses
• Miselling of goods (e.g. tobacco and baby milk)
• Destabilising the local economy

• Established world trade rules
• The goal is to promote fair and free trade across all nations 
• 149 states are WTO members, with a further 31 in the process of joining                                                                                                                                                                          

CRITICISMS:

• The richest countries and corporations are more effective at getting their voices heard - they set the agenda for debates and issues of the developing world are not listened to
• Rules often end up benefitting the West as free trade means that developing countries have to open up their borders to western TNCs
• The WTO puts the rights of corporations to make profit before the human rights of people in the developing world
• Lacks transparency as many talks happen privately
• Members are not democratically elected

• An international financial institution that provides loans to the poorer countries for capital programmes with a goal of reducing poverty
• Provide loans for large scale development projects that are undertaken in partnership between governments and TNCs
• Believes that economic growth through industrialisation and free trade is essential for development
• It provides aid and loans to help countries develop in 5 main areas:                                                                           

1. Strengthening governments and educating government officials
2. Infrastruction creation
3. Developing financial systems
4. Combatting corruption
5. Research, consultancy and training                                                                                                                                     

CRITICISMS:

• Countries that have adopted a free market have developed slower than those that have protected their economies
• Dependency Theories argue that the policies are merely a way to open up countries for exploitation by TNCs
• Forces structural adjustment programmes onto countries in return for aid

• Nation states are what elected governments come to control when they get into power
• They can be large or small (depending on whether industry or services are publically/privately owned)
• The state can help development by protecting fragile economies in the early stages of economic growth. However, the state can hinder development through government corruption (African dictatorships)                                                                                                                                  

DEPENDENCY THEORY:

• Western Nations caused underdevelopment in the first place through colonialism 
• The state should play a key role in development but developing nations should islolate themselves from the global capitalist system                                                                                    

NEOLIBERALISM:

• Nation States hinder development by interfering with free trade. They should have less of a role in development and development should be taken over by TNCs                                                                                                                                                                

PEOPLE CENTRED DEVELOPMENT

• The militaristic nature of western states does little to help peace which is crucial for development

• Have four functions: development, education, empowerment and emergency                                           
  

ADVANTAGES:

• They are more democratic and responsive to the people who need the help
• They are well funded by governments so can meet their aims
• They are more effective/efficient than centralised state bureaucracies 
• No political agenda or profit motive
• More likely to help the poorest of the poor                                                                                                                                

DISADVANTAGES:

• Lack of funding means that they can only do a limited amount comparies to official development aid
• Dependence on support from the public
• Aid can be misguided 
• Spend money on advertising and administration