With the rise of globalization, the world has seen a major expansion of the global economy and the number of multinational firms. This has transformed the nature of non-state actors and the relationship between the state and business actors like MNCs. As the global economy expanded, many countries and communities were keen on taking advantage of opportunities for development. However, the activities of many MNCs around the world have been criticized for significant human rights abuses.

According to Ruggie, there is considerable evidence of harsh sweatshop conditions in many labor factories supplying prestigious global brands. For instance, Bangladesh which has a “$29 billion clothing industry, contains sweatshops that pay garment workers only about $0.35 an hour while multinationals like H&M, Walmart and Aldi take advantage of the country’s dismally low minimum wage” (Volodzko). Ruggie also mentions how MNCs have displaced indigenous peoples’ communities without adequate consultation or compensation to make way for oil and gas company installations. This is most apparent in the Americas. For instance, in Canada there is currently a dispute between Indigenous peoples and Kinder Morgan over the Trans Mountain Expansion Project. In fact, the matter is so controversial that it has been taken to court to ensure that Kinder Morgan and the government follow their obligations under the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) (Kaljur and Jang). Such human right violations have led many to mistrust MNCs even though they have great potential to contribute to the development for all stakeholders.

But there is still hope. MNCs can still deliver significant development and economic growth in many impoverished parts of the world. However, to ensure that abuses such as the ones mentioned above are not repeated, all MNCs should be pressured by states and transnational organizations or movements to adopt or practice measures of Corporate Social Responsibility (CSR) especially in countries that are most vulnerable to MNC exploitation.

The case of Nike is a clear example of how a MNC can adopt or demonstrate CSR and improve their standing as a globally responsible organization of development. According to the Sharon Waxman, CEO of the Fair Labor Association (FLA),Nike for nearly 20 years has demonstrated a steadfast commitment to improving its labor practices by maintaining its Fair Labor Association accreditation. “As Nike has grown the company has expanded its efforts to promote high labor standards across its supply chain.” Big MNCs like Nike can be positive role models in the global economic system regarding labor practices in the global supply chain. Nonetheless, it is imperative thatevery MNC adopt CSR measures to enhance the benefits to all stakeholders and ensure that workers are treated humanely and compensated fairly no matter which country they are located in. To be brief, CSR is an important instrument in the regulation of MNC activities around the world, especially in the most impoverished parts of the globe.

Releases, Press. “Nike Accredited for Fair Labor Practices.” Shop-Eat-Surf, 25 Mar. 2019, www.shop-eat-surf.com/2019/03/nike-accredited-for-fair-labor-practices/.

Ruggie, John. Just Business: MNCs and Human Rights. WW Norton, 2013.

Volodzko, David. “Bangladesh Is Burning and Sweatshops Are the Fuel.” Forbes, Forbes Magazine, 26 Mar. 2019, www.forbes.com/sites/davidvolodzko/2019/03/05/bangladesh-and-the-fire-next-time/#425041a12ca1.

Yates, Andrew. “Why Building A Pipeline on Indigenous Land Is Complicated Even If You Own It.” HuffPost Canada, HuffPost Canada, 5 July 2018, www.huffingtonpost.ca/2018/06/29/building-trans-mountain-pipeline-indigenous-land-complicated_a_23471203/.

With the rise of the American President Donald Trump and his America First policy in World Politics, it seems that international realism is back in full force. From the start of his administration Trump has been a vocal critique of China’s economic policy and has urged American corporations to bring their business back to the United States.

In a recent article, Wattles and Westwood highlight Donald Trump’s efforts to bring Apple back to America by changing the way it makes the iPhone. Essentially, Donald Trump is trying to ensure that an MNC like Apple makes US national interest especially in the area of economic development its priority. Part of Trump’s rationale for bringing Apple back to America is his belief that “China is the biggest beneficiary of Apple — not us.” In other words, Trump is seeking to put America first by forcing Apple to bring the production of Apple products back to the U.S.

What the case of Trump and Apple demonstrate is the ability of states to force corporations to serve their national interests. Trump’s efforts to force Apple to serve American interests and make sure that the money that it is generating in its production process comes back to American pockets is a classic example of mercantilist economics. Such policy fails to recognize the global nature of the supply and production chain of most MNCs in the 21st century. As Wattles and Westwood point out, “The iPhone is produced through a complex, global supply chain. Moving it out of China would be extremely difficult and highly unlikely.” In fact, having Apple produce its iPhones in China is a much more cost-effective approach than bringing that process back to the United States given that it would significantly increase the price of iphones and affect the profits of the MNC. Thus, one of the major reasons why an MNC like Apple produces its iPhones in a country like China is primarily because it is cheaper to do so.

Some have argued that MNCs have become such powerful entities in the international system that they can often erode a state’s sovereignty. While this may be true in the developing world, the case of Apple and Trump is a clear indication that MNCs are or can still fall under the whim of state power. As Gilpin argues MNCs prefer to be stateless. However, States are the primary and most important entities of power in the international system and their sovereignty will always trump that of any other. In other words, corporations as non-state actors in the international system, may have become significant players in the area of business and development yet their activities can always be altered or limited by the authority of powerful states like the United States.

Gilpin, Robert. U.S. Power and the Multinational Corporation: The Political Economy of Foreign Direct Investment. Basic Books, New York, 1975.

Wattles, Jackie, and Sarah Westwood. “Trump Again Says Apple Should Change How It Makes the iPhone.” CNN, Cable News Network, 4 Jan. 2019, www.cnn.com/2019/01/04/tech/trump-apple-china/index.html.

FDI what is it good for? Absolutely nothing? FDI is a confusing thing because it carries with its assumptions and structures which some perceive as equalizing and liberating, whereas others perceive it as destructive and exploitative. As someone who is typically critical of MNCs it is hard for me to imagine FDI as an inherently positive force. Examples of FDI and austerity as pursued by the IMF and world bank hurting third world countries are visible many places. In Jamaica and India, the destruction of the ISI programs, and state protectionist programs and being replaced by FDI, while increasing GDP, has been increasing exploitation of the land and the population. Yet this cannot be said to be FDI’s fault, but rather the fault of the broader liberal and neo-liberal regime which uses FDI as a tool to seemingly undermine state sovereignty. But if this structure and regime is already pre-established, is FDI the actual issue, or is FDI and MNC involvement in the third world a necessary evil as Susan Strange might put it. Susan Strange, a Marxist IR theorist, argues that while FDI and MNC exploitation of the global south is deeply destructive and harmful, yet she pessimistically believes it is currently a necessary evil within the overall immobile capitalist structure. For Susan Strange and Marxist like her, FDI and MNCs provide the base capital and investment to kick start development in the developing world, and therefore through FDI countries and people become less exploited—after they are initially greatly exploited. This argument actually sounds less Marxist than liberal, because rather than attempting to change the world—which is Marx’s main goal—Susan Strange admits defeat in the face capitalism and decides the only way to improve the conditions of the poorest, is for them to be exploited even more. Yet does FDI actually improve the conditions of the global south or decrease them? These questions can’t actually be answered by me, but again I feel that when FDI is used as a way in which to remove more state-centered policies, one allows the global capitalist regime to implement austerity and market-centered policies. This removal of the state power, through state power such as trade treaties and global IO’s, the implementation of FDI—while perhaps not directly negatively affecting the material conditions of the working power—erodes the states capacity to regulate MNCs and capital. As such while FDI may not have a directly negative impact, it may in fact indirectly hurt workers by disempowering the governments which may have protected the workers.