The Strategy and Influences for an Ethical Multinational Enterprise (Mne) Foreign Direct Investment (Fdi)

Topics: Ethics, World Trade Organization, Globalization Pages: 6 (2074 words) Published: May 20, 2012
The economic globalization is a gradual active process of regulatory steps and trends towards the establishment of a unified global market, unbounded by tariff or non-tariff barriers and unrestricted by state borders. Multinational enterprises are the forefront vanguards of this process. Since the beginning of the Industrial Revolution in the 18th century, international business activities have had a paramount impact on previously exclusively state-reserved rights like fiscal policies, political and economic strategy formation, national and international legislative initiatives and even the formation of security alliances. Nevertheless, the uneven development level of countries across the globe has caused controversies in multiple aspects related to multinational corporate operations, primarily in the closely related terms of Foreign Direct Investment and international trade. Cases of violating human and civil rights, shady lobbyism and pressure on state authorities, aggressive exploitation of socially and economically disadvantaged groups, unsustainable and environmentally endangering management of natural resources on foreign territory and others have arisen suspicion that multinational enterprises rarely, if ever, adhere to high conducts of ethical relations with all stakeholders.

The strategy and influences for an ethical multinational enterprise foreign direct investment are inherently derived from the entities’ relations with its stakeholders. The scope of business ethics (which are a form of applied ethics) is gigantic, ranging from the ultimately ontological aspect of the existence of business in any form and the optimal structural paradigm of society, to notably more concrete and of greater applied value fields such as ethics of finance, HR, technology, and international business. Post-structuralism and postmodernism have expanded the ideas of thinkers and philosophers such as Virginia Woolf, James Joyce and Roland Barthes to conclude that the modern world is relational, thus the ultimate verdict on ethical behavior should take into account the multi-facetted relations with a myriad of stakeholders, rather than intolerantly assume a single narrow viewpoint.

Before embarking on the task to clarify ethical issues related to FDI, it is rather important to establish a general theoretical framework of the FDI and international trade processes. Currently, both are governed and supervised by the World Trade Organization. According to WTO’s corporate history (WTO, n.d.) it was established on January 1, 1995 under the Marrakech Agreement, assuming the position and responsibilities of the General Agreement on Tariffs and Trade (GATT). In recent years, the bulk of WTO’s efforts and attention has shifted from the policies undertaken during the Uruguay Round (ones straining to foster the adaptation to a new globalizing world, agreements centered onto crystallizing and facilitating trade in services, intellectual property, dispute settlement, etc) to the more strategic current Doha round. However, in a speech for the WTO Public Symposium, the Vice Principal of the London College of Management Studies, Dr. Palto Ranjan Datta (2003) argued that the claim of proponents of a WTO investment agreement to “help stimulate long-term foreign investment in poor countries, stabilize capital flows, and strengthen the WTO system” is unfounded and “if industrial countries want to promote investment in developing countries, they should use the Doha round to create the right conditions by opening their markets, eliminating agricultural dumping, and reforming the TRIPs agreement”. The strategy of multinationals should take into account at least in a tactical plan the moves of the international community with regard to liberalization of markets and possibly undertaking efforts towards instituting new FDI and trade trends. There is also a common misconception about the factual state of FDI value dispersion across the...
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