Aisha Dos Santos

Reading Juliette Bennetts piece on “Multinational Corporations, Social Responsibility and Conflict” describes the ways in which MNCs should not replace or usurp governments and the way that they function within a state, but MNCs often work with NGOs and governments use their skills to promote stability in a state. But Bennett argues that MNCs can also be a vital force for corruption, but this corruption is not solely placed upon the shoulders of MNC firms because corruption is a vestige of a state lacking a transparent, honest, and accountable institutions and governmental apparatuses. When governments tend to lose grip on order this leads to the decay of accountable and democratic institutions within a state. This then leads to the possibility of the private sector engaging in policy dialogue or in civic institutional dialogue. But with the consistent increase in globalization, their needs to be greater economic inclusion and social justice in its operations, or violent conflict in institutionally weak countries will continue to reoccur (Bennett, 2002, p. 410).

The firms of two large MNCs Odebrecht and Petrobras, that are currently operating within many Latin American countries exemplify this need for transparency in government when engaging with the private sector. The Petrobras and Odebrecht scandals have embroiled business elites and politicians across Latin America, culminating in hundreds of arrests, and billions of dollars in bribes paid (Sabados, 2018). Executives from both Petrobras and Odebrecht, including the latter’s former chief executive, Marcelo Odebrecht, were sentenced to jail time. In April 2017, a U.S. federal court ordered Odebrecht to pay $2.6 billion in fines to authorities in Brazil, Switzerland, and the United States. The company had previously admitted to paying out hundreds of millions of dollars in bribes to officials in twelve countries. Facing financial losses that stem in part from the probe, the two companies have laid off more than one hundred thousand employees (Labrador & Felter, 2018). By October 2018 Lava Jato had resulted in more than two hundred convictions for crimes including corruption, abuse of the international financial system, drug trafficking, and money laundering. More than a dozen other corporations and multiple foreign leaders have also been implicated in Lava Jato (Labrador & Felter, 2018). This displays the ways in which states and heads of their government have the tendency to engage in clientelistic practices with corporate executives of MNCs through politically corrupt practices in the form of political bribery. Bennett’s article displays the way that MNCs have a reach that can exercise and operate across borders, should bear the responsibility for the effects of their operations on local environments.

Works Cited

Bennett, Juliette. 2002. “Multinational Corporations, Social Responsibility, and Conflict”.

(New York: Journal of International Affairs). P. 393-410.

Labrador, Rocio Cara, Felter, Cara. (2018). “Brazil’s Corruption Fallout”. (Council on

Foreign Relations).

Sabados, Katarina. (2018). “Brazil: Petrobras CEO Guilty in Odebrecht Corruption Case”

(OCCRP: Organized Crime and Corruption Reporting Project).

Aisha Dos Santos

POLI 372A

Susan Strange’s “Rethinking Structural Change in the International Political Economy: States, Firms, and Diplomacy” made me reflect upon the ways in which differing domains of studies in international business and international relations have tried to study the structural changes of the world economy, but they have neglected to realize that structural changes have moved beyond the spheres of finance and domestic production. These structural changes account for why we are beginning to see multinational corporations affecting the diplomacy between the state and other competing states. States are now competing with other states over multinational corporation firms because they realize that due to the internationalization of production it has acted as a catalyst towards the industrialization of the developing world. Developing countries now want to industrialize at rates that catch up with already developed countries. This exemplifies the ways in which realist state-centric theories have come to dominate the lens through which behaviors within the international system are coming to be studied, but with this rapid globalization of industrialization in the world’s economy and the emergence of MNCs, these phenomenon are really displaying the gaps that these theories have not been able to fully rationalize .

What I have gained from this reading is that social scientists have a tendency to use empirical data and scientific tools to study states and the global political economy. Social scientists desperately need to broaden their research focus towards ways that recognize the ways in which new technologies have increased the globalization of production, and this internationalization has led to industries being produced in states around the world. This can be attributed to trade and tariff barriers being gradually struck down, the mobility of capital increases, and the lowering costs of transborder transport of goods/services. Social scientists need to become more aware of this activity occurring in the free market, and the ways competition amongst producers has lowered costs to consumers in both the developed and underdeveloped world. This has offered a variety of goods and services and this competition in the market has gradually increased the income of workers. Therefore,, states are beginning to see the benefits resulting from this industrialization even in traditionally socialist states. These factors have contributed to states forging diplomatic relations not only between states themselves, but have widened their diplomacy towards firms, because states are realizing that capitalizing and persuading a firm to locate in their home state is an advantageous venture. This changing of diplomatic arrangements displays the way that states that are no longer the main power drivers in the international economic and political system. I think this can be attributed to the breaking down of regulations and economic barriers, and this increased competition in the free market has made alliances between states and firms attractive, due to a payoff that benefits both parties. It seems that they need each other, whether they agree to it or not, due to the nature of globalization and the liberalization of international finance.