Multinationals, Globalization And Ethical Challenges. An Empirical Evaluation
1.1 Background of the Study
Multinational corporations are important factors in processes of globalization. National and local governments often compete against one another to attract MNC facilities, with the expectation of increased tax revenue, employment, and economic activity. To compete, political entities may offer MNCs incentives such as tax breaks, pledges of governmental assistance or subsidized infrastructure, or tax environmental and labour regulations. These ways of attracting foreign investment may be criticized as a race to the bottom, a push towards greater autonomy for corporations, or both.
The 20th century development of low cost technologies of communication and transportation has shown the potential for globalization which has become available to virtually all. Because of essential needs for an expanding market and low cost labour and materials, the most aggressive thrust toward globalization has, of course, been that of the business community. And it is the multinational corporation in particular, that has been subjected to the most intense critique. Globalize business expansion has been variously excoriated for its exploitation of foreign workers (and women in particular), ruthless destruction of natural resources, disregard for the safety of its working conditions and products, marketing of essential products, and its destruction of local cultures.
For a chorus of critics, multinational corporations have
been singled out as worst case examples of ethical consciousness (see for example, Muller, 1974; Tugenhat, 1973; Vernon, 1977; Levitt, 1970; Lavipour and Sauvant, 1976; Tavis, 1982). Such criticisms have scarcely gone unanswered. Defenders point to the effects of the multinationals in increasing employment opportunities for thousands of otherwise impoverished peoples, creating an entrepreneurial infrastructure in third world nations, contributing to the democratization of otherwise autocratic nations, and even contributing to the end of apartheid in South Africa.
Further, in the mushrooming of international voluntary organizations (Cooperrider and Passmore, 1991), commentators point to the potential of globalization for altruistic and life-giving ends. However, much of the argument on behalf of globalization, and particularly in the corporate sector, has remained defensive. Strong attempts are made to generate ethical guidelines, and to avoid undesirable publicity (though the development of public relations offices). But the general posture remains one of quiet reserve toward the ethical dimension of globalizes expansion.
Based on these, the researcher tends to find empirically the impact of multinational corporations and globalization on ethical standard of Nigeria which will be captured with employment, gross domestic product and health standard of Nigerians
1.3 Statement of the Problems
Multinationals and Globalization are currently a popular and controversial issues. This is because their impact on economic growth is of positive and negative. Many researches have been conducted towards finding the relevancy of multinationals/globalization to economic growth and development. The results of the researches lead to the controversies that associated with globalization and multinational corporations.
This current research on multinational, globalization and ethical issues in Nigeria is to bridge the gap that exist between these parties involved in the controversy and at the same time determine empirically the impact of multinational corporations and globalization on employment, GDP and health system of Nigerians.
1.4 Objectives of the Study
- To evaluate the impact of multinational corporations and globalization on ethical issues through employment generation.
- To assess the impact of multinational corporations and globalization on economic growth of Nigeria
- To determine the impact of multinational corporations and globalization on health conditions of Nigerians
- To offer some recommendations based on the finding of the study.
1.5 Research Questions
- Does multinational corporations and globalization have any impacts on ethical issues through employment generation?
- Does multinational corporations and globalization have any impact on economic growth of Nigeria?
- Does multinational corporations and globalization have any impact on health conditions of Nigerians?
1.6 Research Hypothesis
Ho: multinational corporations and globalization have no positive impact on ethical issues through employment generation.
Hi: multinational corporations and globalization have a positive impact on ethical issues through employment generation.
Ho: multinational corporations and globalization have no positive impact on economic growth in Nigeria
Hi: multinational corporations and globalization have a positive impact on economic growth in Nigeria
Ho: multinational corporations and globalization have no positive impact on health condition of Nigerians
Hi: multinational corporations and globalization have a positive impact on health condition of Nigerians
1.7 Scope of the Study
The study centre on multinational corporations and globalization and their impact on ethical issues through employment, economic growth and health conditions of Nigerians from 1990-2010.
- Significance of the Study
The study is intended to provide an understanding of the relationship among multinational, globalization, poverty, health and economic growth. It is designed to contribute to existing knowledge and literature on multinational corporations, globalization, health and economic growth. In this light, it will provide scholars with more intellectual raw materials for further studies.
The study is of importance to the government and policy makers in their formulation and implementation of policies. Since the problem concerns the entire society and the policy formulated and implemented by the government have a multiplier effect on the whole economy, the entire society and all the sectors of the economy will benefit from this study.
- Limitations of the Study
This study was also faced with certain constraints such as limited time frame with which to collect all necessary data, lack of financial resources, limited accessibility to data and literature.
- Contextual Definition of Terms
Multinational corporations: These corporations are business entities that operate in more than one country.
Globalization: This refers to the process of the intensification of economic, political, social and cultural relations across international boundaries.
Ethics: Is a measure of deciding a course of action for man. It is the welcomed cultural heritage that determines what is allowed in the society.
2.1 Theoretical Literature
A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries.
Some multinational corporations are very big, with budgets that exceed some nations’ gross domestic products (GDPs). Multinational corporations can have a powerful influence in local economies, and even the world economy, and play an important role in international relations and globalization.
Globalization refers to the process of the intensification of economic, political, social and cultural relations across international boundaries. It is equally aimed at “making global being present worldwide at the world stage or global arena”. It deals with the “increasing breakdown of trade barriers and the increasing integration of World market (Fafowora, 1998:5). In other words, as Ohuabunwa, (1999: 20) once opined:
Globalisation can be seen as an evolution which is systematically restructuring interactive phases among nations by breaking down barriers in the areas of culture, commerce, communication and several other fields of endeavour. This is evident from its push of free-market economics, liberal democracy, good governance, gender equality and environmental sustainability among other holistic values for the people of the member states.
There is no doubt whatsoever that globalisation is one of the most challenging developments in the world history. As Tandon (1998A:2) once opined, “globalisation in its most generic and broad sense is part of the movement of history”. In other words, globalisation which is an “imperial policy” (Toyo, 2000) and the “final conquest of capital over the rest of the World”, is deeply rooted in history and quite explainable within the context of the one -arm banditry and exploitative antecedents of capitalism which, by its nature cannot exist without parasitic expansion.
Given the changing faces and phases of globalisation and its immutable central and primary focus to exploit African resources, disintegrate its economies and incorporate it into the international capitalist economy, it is imperative to emphasis that, the different conceptions, notions and treatment of globalisation by scholars are not incompatible with one another. The limitation of these conceptions, notions and treatments, however, is that, it does not describe the sudden yet significant shifts in the world economy, but, rather, simply the continuation of longer term trends. Rather, the new development which seems to connect these different strands is that an increased pace of capital mobility has begun to shift the prospects for economic development and growth to the global level – an indication of the expropriation of surplus and capital flight from the African economies.
Nigeria and the Multinational Corporations
The Nigeria nation existed with all the natural resources she was endowed with before coming in touch with the Western world. Nigeria like the rest of the African nations had her peculiar kind of civilization and development before the arrival of the white man in the 15th century. The contact with the white man resulted into a trade, which marked the beginning of the doom of the African nations at large because of the imbalance in trading pattern. This marked the starting of the development of Europe and underdevelopment of African nations including Nigeria.
As if this imbalance was not enough, the West came down to effect physical domination of the continent and to rape it of her precious raw materials. Thus, with the Berlin division of the continent in 1884, the rape was heightened and given international recognition and support. This situation continued until the coming into the scene by African nationalists who schooled abroad, to demand for self-rule. The West granted independence to the colonies and handed over political powers to these “European-Africans” as the rulers of the independent states. These new rulers were described by Franz Fanon (2004) as ‘Black Skin, White Masks’ meaning that they were extension of Europe; that is more of Europeans than Africans. The African states including Nigeria were in the hands of these men when the MNCs came on board mainly to replace the white rulers in the area of economic exploitation. So the exploitation contract was signed and sealed with these ‘Black skins, White masks’, who did not know at that time the implications of the contract, and when and where they knew were helpless about the situation.
So whatever the MNCs are doing in Nigeria has the backing of the Nigerian government, no thanks to the unfair contract signed. The way the Nigerian government is protecting and supporting the MNCs against the restive youths of the Niger Delta who are making just and legitimate demands testify to this. The actual implication of the contract signed is that the Nigerian nation is the fake owner of her God-given natural resources who receives only royalties or pittance while the major profit is transferred abroad to the home countries by the MNCs who now are actually the real owners of the raw materials. There was a time during President Buhari and Idiagbon’s regime when the Nigerian government could no longer bear this unfair treatment of the MNCs and tried to circumvent the terms of the agreement by way of increased tariffs and taxes. The MNCs on the other hand undermined this move by way of double accounting. By the principle of double accounting, which goes by way of the MNCs determining the price of the equipment they bring inside the country and at the same time determine the price they pay for what they take from the country.
In this situation Nigeria lost more money than ever. However, the unfair treatment by the MNCs has come to stay and Nigeria cannot really do anything positive about it. If Nigeria should ask them to go, the high level of corruption in Nigeria will not allow for effective replacement. If Nigeria attempted to sack them, Nigeria will not find it easy in the international market because there the Western world will conspire against Nigeria. So these MNCs have become a sort of devil’s alternative.
Negative Impact of Multinational Corporations
The clash between multinationals and host countries has been most intense in the less developed economies. Individual critics and public officials have leveled vociferous charges against the policies of international corporations and their alleged negative consequences for the economic well-being and development of the host nations (Gilpin 1987). This view prompted the reaction of Onimode (1982) and to conclude that there is more myth than reality in the developmental activities of the MNCs in Nigeria. He further stated that a thorough empirical analysis of the impact on the Nigerian economy and consciousness will reveal the following:
1) Decapitalization of Nigeria: This thesis argues that most of the capitals in the form of profits are not invested in the country but sent to the home countries of MNCs for investment, thereby rendering Nigeria industrially underdeveloped. The royalties or pittance paid to the government European Journal of Social Sciences – Volume 19, Number 3 (2011) 384 by these MNCs cannot because of its meagerness be employed into heavy industrial projects. In brief, the MNCs export abroad the capital that would have been used to develop Nigeria
2) Technological backwardness: It is in the area that the MNCs are regarded as the worst culprits because it is in this section that the MNCs play their greatest trick imaginable. The MNCs by way of purporting to help industrialize Nigeria create a branch-plant economy of small inefficient firms incapable of propelling overall development. The local subsidiaries exist only as enclaves in the host economy rather than as engines of self-reliant growth.
The negative impact of MNCs on Nigeria is most noticeable in this area of technology transfer. There are four main reasons for this assertion;
- a) Most of the imported technologies came under the industrial property system of restrictive patterns and license. This is a very sensitive barrier for Nigeria. The implication of this is that Nigerians cannot copy and internalize these technologies even if they have the capacity and willingness to do so because it is illegal for them to do so.
- b) The MNCs jealously guard the technological know-how of their technologies by way of refusing to make use of competent staff. By implication Nigerians cannot learn from the technicians the intricacies involved in the production of the material or product.
- c) Another point of skillful deceit by the MNCs is the fact that where qualified and competent indigenous staff are to be exposed to the technological know-how of a type of production.
- d) The MNCs increase the mal-distribution of income in Nigeria and other less developed countries. The case of oil workers earning in a month what some federal civil servants earn in a year does not augur well with the development of the nation. This step creates a class-conscious society, which does not help development as such.
Other forms of negative effects include:
- Structural Distortion: The principle of industrialization in an open economy of the Nigerian government in relation to the MNCs has given the MNCs the freedom to choose their line of operations, the locations of their industry and other productive processes. The MNCs natural base is usually in urban centers of the Nigerian society like Lagos, Kaduna, Enugu and Port-Harcourt. This urban concentration of MNCs distorted the structure of the society by enhancing an uneven “development”.
- Political Instability: Because these corporations require a stable host government, which of course is sympathetic to capitalism, they try as much as