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Harnessing the power of the
multinationals |
By Paul Lewis International
Herald Tribune
Monday, February 14,
2005
| The fight against
poverty
BRATISLAVA, Slovakia Policy makers
galvanized by recent proposals from the UN and others calling for a
fast and substantial reduction in global poverty should consider one
region that has already undergone a remarkable transformation in the
space of just 15 years: post-Communist Eastern Europe. Though the
region is unique in many respects, it may hold some important
lessons for other developing countries. Crucial to its success has
been the influence of multinational companies, whose potential role
is often ignored in development strategies.
Since the fall
of Communism in 1989, Eastern Europe has attracted some $300 billion
of foreign direct investment. But the multinationals that arrived
did much more than just invest money. They provided technology,
know-how and access to foreign markets and, most importantly,
introduced higher standards of performance, ethics and practices
that have spread across the region.
Where these corporations
have arrived in force - mainly in the new EU member states in
Central Europe and the Baltics, and, increasingly, the Balkan
countries - they have brought countless benefits. These include
opening up global employment opportunities for the brightest of the
new generation; retraining formerly mistreated work forces;
improving the environment; rescuing collapsing factories and rotting
company towns; establishing new industries; laying new
telecommunications networks; stabilizing banking systems;
regenerating local brands; driving economic growth through their
exports; and facing down corrupt vested interests in governments
that in too many cases had plundered their own countries. It's not a
bad record for the supposedly rapacious, selfish enterprises, as so
often portrayed by antiglobalization campaigners.
Take
Temirtau in the steppes of Kazakhstan, which was a dying steel town
facing the worst AIDS and drugs epidemic in Central Asia, before
LNM, one of the world's largest steel companies, took over the mill
and saved the town. Or the Skoda car company in the Czech Republic,
whose best product was the feeble Favorit until Volkswagen turned
the Skoda name into an international, award-winning brand, and in
the process helped to create Europe's fastest-growing industrial
cluster of automotive producers, suppliers and sub-suppliers.
Changes like these have occurred not as a result of lofty
exhortations from politicians to "change path" or "join the heart of
Europe," or "end poverty," but from the daily grind of multinational
subsidiaries on the ground.
The behavior of multinationals in
Eastern Europe has not always been exemplary in every way. But their
overwhelmingly beneficial impact should give pause for thought to
antiglobalization activists and development experts - many of whom
view multinatinoals as part of the problem, not the solution.
Indeed, if development programs were to harness the
multinationals' power as part of a more coordinated effort, while
still recognizing the paramount nature of their profit motive, the
benefits of foreign investment could be accelerated and accentuated
enormously. Multinational companies are some of the most efficient,
dynamic and talent-filled organizations that the capitalist world
has to offer; and thousands of big-name global corporations are
clearly willing and able to assist in improving the quality of life
in the developing countries in which they operate, if guided in that
direction.
Some companies have already made a start. More
and more are signing up to a "publish what you pay" campaign to
pressure authoritarian governments into greater accountability about
where money raised in public tenders is spent, and are setting
global codes of practice in labor relations and environmental
protection that will also force local businesses, often the worst
exploiters, to raise their standards as well.
But much more
could be achieved. For example, multinational banks and telecom
companies have shown in Eastern Europe how they can roll out branch
networks and phone connections across a country in little more than
a year. Such services, among the more empowering contributions that
multinationals have made to Eastern Europe, could extend to the
world's poorest, remotest villages too, with the support of
well-devised government or UN programs.
Big-name
manufacturers can also act as a "reference" for their host country
or municipality, by persuading other international firms to invest
too, multiplying the sources of technology and training. They can
provide mentoring programs and internships to raise the performance
of those who fall short of international quality standards.
Multinationals can even help to provide employment for minorities
that face discrimination.
This and more has been done in
Eastern Europe. Unfortunately, multinationals are seldom viewed in
such a constructive light by traditional development players. This
is a terrible waste of resources.
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