While many of the debates regarding Multinational activity has concentrated in the regulations of corporations and the displacement of workers due to offshore/outsourcing production, little has been said about the impacts of mechanization in labour markets worldwide.

Multinational Corporations are praised by transferring production to other states in search for competitive advantage terms in production, and primarily due to their ability to foster innovation and technological development around the world. The use of assembly lines in manufacturing countries such as China has created a large diffusion of goods and services throughout the world, generating an immense amount of wealth and development for countries and corporations. However, this has come at a certain labour cost. As MNC’s seeks to offshore/outsource their production, local labour markets in countries such as the US and Canada have dealt with significant decreases in manufacturing employment, hurting the lives of millions of blue collar workers. Nationalist movements are developing following this rhetoric, as MNC’s seek to gain more profits with low-wage production, home economies are experiencing loss of jobs and opportunities to different countries.

But what happens when this is no longer the problem of economies? what happens if the model of offshoring to China exhausts itself? MNC’s are largely successful due to their technological means to generating new products. New technologies increase the efficiency of factors of production, reducing time constraints in production. The mechanization of production has allowed economies of scale in generating large amounts of profits for corporations. But, with the advances in technology and mechanization, more and more laborers are prone to face employment insecurity, as they fear that machines might substitute their job one day.

This fear is real and understandable. Not only so, it is detrimental to the study of Multinational Corporations. New forms of production, such as 3-D printing, appear to be, on one side, a facilitator of production, but at the same time, a threat to employment in manufacturing countries. What will happen when 3-D printing, and other labour-replacing techniques, develop to the extent that they are present in all forms of production? The threat is clear. The fear of losing jobs in the US will extend to other countries in the world, most precisely manufacturing countries in Asia for example. The immense amount of labor in which countries have might not serve as a comparative advantage for production anymore, as machines might displace Foxconn workers in the production of iPhones in China, or displace auto-assembly workers in Hyundai, in South Korea. Some are saying that this is another “industrial” revolution that will take place in the world, and yet, little efforts have been made to understand the ramifications of mechanization in global labour markets.

In addition, the question arises: if countries with surplus labour might face comparative advantage exhaustion with mechanization, what will happen to countries such as US and Canada? With low surplus labour? One trend is to shift employment towards the production of services, making the country less dependent on manufacturing. However, manufacturing is very important for any country, and countries such as the US cannot lose their global share in manufacturing activities. Thus, how to curb the advances of mechanization in the destruction of jobs worldwide? Should we adopt these machines and train humans to develop their comparative advantage in other areas? It is hard to say… it depends largely on the interests and policy perspectives of different nations in recognizing this as a real threat to global labour markets.

http://www.economist.com/news/21566427-new-technologies-3d-printing-will-transform-assembly-line-manufacturing-future

Burger King, Tim Hortons, Kraft.co, Anheuser-Busch InBev. Giant multinational enterprises, largely responsible for supplying consumption goods for millions of citizens worldwide. Enterprises located in all continents of the world, offshoring production and services to billions of people in a daily basis. Whether you are eating a Burger King in America, or drinking a coffee in Canada, or drinking Foster’s beer in Australia, you are consuming goods produced by the same owner…

That may be intriguing, but It shows the reality of multinational corporations and foreign direct investment in the world. With the internationalization of finance and trade, investment firms and multinational corporations continue to predate in the global economy, harnessing a large portion of the population in their webs of complex global supply chains.

All the companies mentioned above are under control (partial, of course) of 3G Capital, a Brazilian multibillion-dollar investment firm. This firm’s name might be an incognito for most citizens, but it produces large amounts of consumer goods in different parts of the world, generating immense amounts of profits for the firm. 3G Capital motto is simple. The surgical approach towards operational costs, the firm intends to slash unnecessary costs that might hamper future profits. They publicize their motto, they are not ashamed of behaving this way, as this behavior has been transformed into years of corporate success, fulfilling investors and stake holders expectations. However, this comes at expense of workers, assets, factories, you name it. The motto is clear, a rational theory for MNC, lower transaction costs, more profits. Whatever increases their costs and might be unnecessary must be eliminated. This monopolistic advantage, with high profits and merit rewards, is praised by many in the financial world, but largely criticized in the political field of study.

Thus, the question arises: Is 3G Capital aggressive, slash costing behavior is ethical? Is the displacement of many workers for the preservation of large dividends in the end of the year right? This question, in my opinion, does not have a final answer. The rationale from the company is always to increase the productivity and efficiency of its factors of production, in order to gain profits. An appraisal must be given to the 3G Capital, in producing quality services, under different brands, to millions and millions of people. Their efforts must be rewarded somehow. However, to what extent? Should government condemn this sort of MNC’s activity or should they work together to make these corporations more socially responsible to the ramifications it causes in the lives of workers at their companies?

Link:

http://fortune.com/2015/03/25/3g-capital-heinz-kraft-buffett/

Corruption has always been an inhibiting factor in the development of Latin American societies. Throughout history, several government officials, from multiple countries in the region, has been publicly condemned for participating in cronyism and graft schemes. However, the problem of corruption in Latin America does not rest solely on the actions of government officials, but also Multinational Corporations, as we can see in the Odebrecht scandal.

The Operation Car Wash, launched in 2014 in Brazil, was designed to investigate a scandal involving the state-owned enterprise Petrobras, with the claim that government officials were funneling public money towards personal enrichment and financing elections campaigns. With time, Brazilian officials discovered a massive web of corruptive practices beyond Petrobras, involving major corporations in Brazil, most precisely in the construction/infrastructure sector. In essence, companies were creating cartels, with the permission of the government, to curb competition from other companies involving public contracts. In reward, companies distributed a small percentage of “contribution” to local politicians. This scheme perpetuated through years and years, revealing how corruption still haunts Brazil.

This scheme expanded not only in Brazil but in other areas of Latin America and in other countries, mostly in Africa. It was revealed, out of plea bargaining, that the biggest multinational corporation in Brazil, the conglomerate Odebrecht, was paying bribes for politicians in Equador, Colombia, Venezuela, Cuba, and in Mozambique, in order to have access to large public construction contracts in those countries. In addition, it was discovered that Brazilian politicians, such as former President Lula, was lobbying in favor of the company for other governments, convincing them to hire the Odebrecht services for their countries.

This example is vivid in illustrating the vices of multinational corporations and politicians and is essential to understand how vested interests from powerful agents transpose boundaries and reach international levels, contaminating countries with corruptive practices. In short, this scheme illustrates the dangers of multinational corporations in bed with local governments and the reality of oligopolistic behavior by corporations. Indeed, the Odebrecht projects brought benefits to Brazilian and other Latin American countries in infrastructural terms, helping the lives of many. However, most of these contracts were plagued with corruption, which illustrated later that a lot of money could be used for reinvestment in the country instead of showing up in politician pockets, aiding in the lives of millions more. This example clarifies the need for a bigger regulatory system regarding the participation of Multinational corporations abroad in Brazil and Latin America.

Link: https://www.nytimes.com/2017/02/13/world/americas/peru-colombia-venezuela-brazil-odebrecht-scandal.html?_r=0

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