|
Preface The World Summit for Social Development, to be held in Copenhagen
in March 1995, provides an important opportunity for the world community to focus
attention on current social problems and to analyse the dimensions, roots and directions
of social trends. In particular, the agenda of the Summit specifies three areas of
concern: the reduction of poverty, the generation of productive employment, and the
enhancement of social integration. UNRISD work in preparation for the Summit focuses on
the last of these: as countries confront the seemingly intractable problems of social
conflict, institutional breakdown and mass alienation, the topic of social integration
has assumed increasing importance in public debate.
The UNRISD Occasional Paper series brought out as part of
the Social Summit preparatory process takes up a range of issues relating to social
integration. This paper examines the relationship between transnational corporations
(TNCs) and social development.
Although the impact of the operation of transnational
enterprises has long been the subject of much discussion and controversy, this debate has
witnessed a qualitative change over the past 5 to 10 years. The fall of the Soviet empire,
the decline of social welfare programmes in some European states, and the predominance of
a free market ideology have all tilted this debate in favour of transnational
corporations. Furthermore, the increasing mobility of capital as well as the growth of
international and bilateral trade agreements have expanded the powers and privileges of
these multinational entities, while minimizing their social responsibilities. This
changing environment is particularly notable in many developing countries where
governments, once extremely suspicious of foreign corporations, are now exerting efforts
to attract TNC investment.
Despite this shift in thinking and policy, there still
exists substantial disagreement regarding the extent to which transnational corporate
activity promotes positive social development. On the one hand, proponents for TNCs argue
that these entities advance social goals by providing jobs, paying taxes used for social
programmes, building an industrial base, earning foreign exchange, transferring
technology, raising living standards and contributing to charitable causes. On the other
hand, advocates of enhanced corporate responsibility note that TNCs have been linked to
interference in sovereign affairs, continued disparities in wealth, poor workplace
conditions, corruption, transfer pricing policies, and a "downward harmonization"
of labour, consumer and environmental standards.
This paper assesses the two sides to this debate. It
specifically examines the relationship between TNCs and social development with respect to
their effects on employment, consumer safety and health, the environment and transfer of
technology. Furthermore, it discusses the current expansion in corporate rights and
suggests some methods by which governments and NGOs can foster corporate social
responsibility. Finally, it argues that, as prevailing ideologies shift and transnational
corporations extend their global reach, the international community must ensure that the
extraordinary economic and political power of these entities is harnessed to the goals of
social development.
Eric Kolodner is currently doing research at the New York
University Law School and Princeton University's Woodrow Wilson School. The production of
this paper at UNRISD was co-ordinated by Peter Utting.
| November 1994 |
Dharam Ghai |
|
Director |
|
