Transnational corporations and the global supply chain

Abstract

Introduction Accounts differ, but it is probably right to say that there are between 63,000 and 77,000 transnational corporations (TNCs) driving today's global economy. TNCs’ presence and influence are felt everywhere from New York to Bangalore to Nairobi, by people in all walks of life, by wealthy shareholders and assembly-line workers earning the minimum wage. TNCs dominate world production, foreign direct investment (FDI) and international distribution networks. Their assets and revenues are sometimes compared (usually incorrectly) with small nations’ gross domestic product (GDP). Such comparisons are utterly misleading because those making them usually confuse the gross sales of the companies with countries’ GDP. Transnationals are praised by those who maintain that they are efficient at creating new employment opportunities in developing countries and at serving as the link between local businesses and overseas markets that these businesses might not otherwise access, and that they are an important source of technology transfer to host countries. TNCs are also the principal targets of anti-globalisation critics. Some argue that TNCs are associated with environmental degradation, abuse of labour rights and exploitatively low wages, and that their activities are damaging to the prospects for sustainable growth in poorer regions of the world. We have all seen the sweatshop accusations by critics of TNCs. In China, TNCs have contributed to the huge FDI flows that have powered the economy at a white-hot rate of growth, but some economists argue that manufacturing in China is a modern example of immiserising growth.