Multinational Corporations and the Changing World Economic Order

by Richard Steade



The thrust by developing nations for a New International Economic Order together with the disappointments of the North-South dialogue, is not going to ease the job of multinational companies (MNCs). The picture appears to be one of dealing with problems through bilateral give-and-take processes of compromise and negotiation between MNCs and their local host governments. It seems, multinational managers will have to identify and understand the shifting and evolving political, social, and economic restraints on the government officials with whom they deal. Growth without development is based on the penetration of a Third World economy by foreign capital, which results in a distortion. The same "distortion" creates an essentially colonial structure for the benefit of the foreign capitalists. The new colonialism promotes industrialization, but of a very peculiar kind. Generally it is capital-intensive rather than labor-intensive, thus actually creating unemployment in the "developing" country. Allocation of scarce resources to this kind of industrialization actually prevents development in other sectors of the society. "Neocolonialism," therefore, implies increasing impoverishment and ever-greater dependency on foreign forces.

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