Injection of much needed capital and the creation of employment Multiplier effects on infrastructure of local economy May be a better employer than

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3 Injection of much needed capital and the creation of employment Multiplier effects on infrastructure of local economy May be a better employer than locals in terms of pay and other conditions Facilitates the transfer of state of the art managerial knowledge and advanced technology kick- starts the process of economic growth and global integration

4 Labour market- reduced home employment- free resources for activities with comparative advantage USA- in a typical nonrecession year 30 million of approximately 140 million jobs are eliminated and about 31 million new jobs are created. While some of the 30 million jobs that are eliminated are eliminated because companies engage in outsourcing or offshoring, more jobs are created than lost. Capital market- initial capital outflow, inward flow of foreign earnings Balance of trade- outward flow of exportsinputs, HFDI- export substitution, VFDIleading to imports, but lower prices Skills and knowledge transferred from subsidiaries

5 Capital market Initial inflow of capital, followed by outflow of earnings Balance of trade - exports vs. imports; HFDIimport substitution, VFDI- export led growth Overall effect on economic growth/performance higher productivity A percentage point rise in the ratio of FDI to GDP leads to an increase of a half a percentage point in domestic investment and ¾ percentage point in domestic savings. Influences economics growth only if country has s threshold level of human capital (important in China, India) creates overdependence on footloose industries Government incentives - (public expenditure), tax avoidance

6 Job creation- direct/indirect (suppliers) job destruction- crowding out domestic, acquisition (HFDI) skills composition HFDI (human capital development) vs VFDI (skills degradation) stability of employment HFDI vs VFDI wage level higher wages (damaging for local competitors) Overall behaviour- HFDI vs VFDI - social dumping- exploitation of workforce, which accepts any conditions- sweatshops

7 Foreign investor- technological transfer, higher productivity Local companies: Competitors (only in the case of HFDI) decrease prices, increase wages, crowd out benefits- imitation, human capital acquisition Suppliers/customers- potential benefits crowds in domestic investment May expose countries to best business practices and corporate governance Other linkages- with other institutions, indirectly influence the demand for improved infrastructure, corporate institutions (HFDI)

8 Harm to human health- pollution, dangerous products, toxic waste, synthetic chemicals Ecological dumping -countries with lack of regulations Harm to the biosphere- deforestation, clearcuts, CO2 emission, nuclear waste Harm to animals- habitat destruction, factory farming,. Who pays the cost?

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10 Buyat Bay, Indonesia Environmental diseases: Carcinogens, Herbicides Hydrocarbons, Mercury, Pesticides Pollution, Radiation

11 Union Carbide- chemical plant in Bhopal exploded people killed, lifelong health damage. In Thailand and Peru, corporation threatened to move elsewhere, if environmental regulations were enforced. Mining companies pressured the government not to test children living close to the factories. A law was passed making it illegal to suit international mining company.

12 Ok Tedi- Australian gold mine company in Papua New Guinea dumped tons of contaminated material daily into the river over 12 years. Once the mine was exhausted, they admitted that they underestimated environmental impacts and walked away.

13 deforestation Nuclear waste the world s top 3,000 public companies are responsible for a third of all global environmental damage- US$2.2 trillion ( 1.4 trillion) for 2008

14 Media- Monsanto made a hormone- Posilac,. The research documents possible health and safety problems, but people cannot get to know. The court decides that media are allowed to lie (smoking)

15 -Social dumping- price vs. costs (wal Mart 1.4 mil.empl, ½ health insurance)

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18 - Privatisation does not mean you give an institution to a nice person, but to an unaccountable profit maker - privatisation- water, air, soil, seeds, essential services (education, health care)- increases the price for the people

19 Cochabamba, Bolivia

20 World war II- IBM punch card machine for Nacis Indonesia- 1 million people murdered under the Suharto regime- supported by the west- welcomed foreign companies 9/11- a trader describes the tragedy as blessing, because it translates into getting richer

21 Avoiding taxes- high price of inputs, high costs to deduct, the subsidiary then has high income, which is taxed at a low cost location

22 Patenting- US Supreme court ruled that anything alive can be patented except a human being, (GMOs) Monsanto example

23 Creation of illusions, the corporations sell us the idea of better life

24 Consumption is required to support the market system- to make economies grow Commercial advertising and media- can make people buy anything for any price Companies now spend more money on advertising, than the actual process of product creation itself

25 Louis Vuitton Skateboard $8,250 Luxury Frisbees $305 Posh Instant Noodles $43 Concrete Aalto Doorstop $3500

26 Renova Colored Toilet Paper $20 $203,150 Hermes bag Radioactive Denim Metallic Jeans $600

27 It is technically impossible to produce the best of anything if a company is to maintain a competitive edge and hence remain affordable to the consumer.

28 Planned obsolescence is a business strategy in which the obsolescence (the process of becoming obsolete that is, unfashionable or no longer usable) of a product is planned and built into it from its conception. This is done so that in future the consumer feels a need to purchase new products and services that the manufacturer brings out as replacements for the old ones.(nokia phones ) Shift from mechanical to psychological obsolescence

29 By 2002, more than 130 million still-working cell phones had been "retired" in the U.S. Today, about 250,000 tons of discarded but still usable cell phones sit in stockpiles in America, awaiting disposal. In 2004, 315 million working PCs were thrown out in North America alone. Obsolescence, rather than failure is driving the rush to trash

30 Economics deals with optimisation and allocation of scarce resources with the aim to maximize the benefit that can be created by those resources. Does it really?? In reality, the economic system does not allow the most durable and efficient products to be produced and recognises that the longer any good is in operation the worse it is for cyclical consumption and hence the market system itself. Product quality and sustainability is against the economic growth and there is a direct incentive to make sure life spans are short of any given good produced.

31 -Ecological dumping- pollution, human health -Ecological harming- harm to biosphere, animals -Social dumping -privatization- water, air, soil, seeds- Bolivia -Involvement of corporations in conflicts -Transfer pricing -Patenting -Marketing, obsolescence

32 responsible companies will act beyond legal obligations to ensure various commitments are met; including obligations to employees, suppliers, customers, and the wider environment and local communities (Joseph and Parkinson, 2002) Codes of ethical conduct and social responsibility promoted Level of actual investment into CSR/ rigour of implementation subject to question- greenwashing and corporate gloss? In practice it is difficult/ impossible to regulate the activities of MNCs

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36 Movie: The Corporation (available on youtube) Stiglitz- regulating the multinationals Shell- double standards Business rules