Sustainable Development: The Role of Multinational Corporations
Sustainable Development: The Role of Multinational Corporations
Gary Quinlivan, PhD
Saint Vincent College The economic role of multinational corporations (MNCs) is simply to channel physical and financial capital to countries with capital shortages. As a consequence, wealth is created, which yields new jobs directly and through “crowding-in” effects. In addition, new tax revenues arise from MNC generated income, allowing developing countries to improve their infrastructures and to strengthen their human capital. By improving the efficiency of capital flows, MNCs reduce world poverty levels and provide a positive externality that is consistent with the United Nations’ (UN) mission — countries are encouraged to cooperate and to seek peaceful solutions to external and internal conflicts. It follows that a supporting role for the UN would be to motivate developing countries to achieve the necessary political and economic environment that attracts foreign direct investment (FDI). Nations lacking FDI have common characteristics: they have economies that are heavily dependent on government regulations and controlled by inefficient state-operated monopolistic enterprises, and they tend to have non-democratic regimes. As a consequence, these nations are experiencing extreme rates of poverty, repressed human rights, and excessive environmental damage. These problem countries are primarily concentrated in Sub-Saharan Africa, South Asia, North Africa, and the Middle East.1 An important role currently undertaken by the UN is the provision of a valuable and detailed assessment of the economic impact of MNCs through its publication of the World Investment Report. In addition, the UN’s publication of the Human Development Report and the World Bank’s World Development Report, provide researchers with a broad picture of trends in world welfare. These reports, however, present static measures of income inequality and are thus too limiting. According to Nancy Birdsall and
Gary Quinlivan, PhD
Saint Vincent College The economic role of multinational corporations (MNCs) is simply to channel physical and financial capital to countries with capital shortages. As a consequence, wealth is created, which yields new jobs directly and through “crowding-in” effects. In addition, new tax revenues arise from MNC generated income, allowing developing countries to improve their infrastructures and to strengthen their human capital. By improving the efficiency of capital flows, MNCs reduce world poverty levels and provide a positive externality that is consistent with the United Nations’ (UN) mission — countries are encouraged to cooperate and to seek peaceful solutions to external and internal conflicts. It follows that a supporting role for the UN would be to motivate developing countries to achieve the necessary political and economic environment that attracts foreign direct investment (FDI). Nations lacking FDI have common characteristics: they have economies that are heavily dependent on government regulations and controlled by inefficient state-operated monopolistic enterprises, and they tend to have non-democratic regimes. As a consequence, these nations are experiencing extreme rates of poverty, repressed human rights, and excessive environmental damage. These problem countries are primarily concentrated in Sub-Saharan Africa, South Asia, North Africa, and the Middle East.1 An important role currently undertaken by the UN is the provision of a valuable and detailed assessment of the economic impact of MNCs through its publication of the World Investment Report. In addition, the UN’s publication of the Human Development Report and the World Bank’s World Development Report, provide researchers with a broad picture of trends in world welfare. These reports, however, present static measures of income inequality and are thus too limiting. According to Nancy Birdsall and