Global Economy And The Environment Essay, Research Paper

Global Economy and the Environment

As the global economy gets integrated, national or local corporations

will gradually transform in to a multinational corporation (MNC). When this

type of development occurs, the host countries are usually the ones that become

the immediate stake holders. This is because when a MNC sets its foot into a

host country, there are economic, political, social and environmental impacts

that result from their corporate actions. In many cases, it is certainly

possible that it can end up in a win-win situation, if the host country and the

MNCUs both work mutually. However there have been unfortunate examples, where

this has not been the case.

In general, international agreements have its advantages, due to the

fact that we can harmonize international standards. Therefore environmental

concern is one of the key issues that the policy makers and MNCUs should set a

high priority on. This is because growth and development is strongly correlated

with environmental degradation. Furthermore, it is fair to say that the MNCUs

are more likely to have a more harmful environmental impact from growth and

development, as opposed to the local corporations. This is because MNCUs may

not be as knowledgeable as local corporations in resource utilization and land

management. This also refers to the notion of Rthe locals know their land

better than anybody elseS. The tropical rain forest of Brazil is a good example

of this. The RindigenousS or the local people have a good understanding of how

to extract and utilize its resources in a very sustainable manner. However when

a multinational timber company comes into Brazil, result of their actions will

probably be more harmful, due to the fact that they are not complying to the

RtraditionalS methods.

Another important aspect is the fact that in any international trade

agreement, a MNC is most likely going to shift their production to a lesser

developed country. This is because LDCUs are a good target for cheap labor and

low start-up costs. In Robert PastorUs essay, he mentions the term

maquiladoras; Rcheaper labor that allows them (Mexicans) to assemble parts,

import from the U.S. and then reexport the assembled productsS. In places such

as the maquiladoras, safety standards are not as rigid and this puts the local

workers in a serious health risk. The Rblack lungS case is an example where

miners in Latin America contracted respiratory diseases from working at unsafely

regulated coal mines. Since it was in a lesser developed country, occupational

health standards were lower than the usual. The Union Carbide incident from

Bhopal, India is another example, where the explosion took place due to lack of

safety and precautionary measures. Many experts have commented that the Union

Carbide incident could have been completely avoided, if the plant was located

elsewhere, in a more developed country, where they have more strict standards.

So there is a need for universal standard on these types of issues. Unless this

is achieved, the LDCUs would be placed in a vulnerable situations as more and

more MNCUs will take advantage of this.

When MNCUs come into a host country, this increases their revenue and

their GDP. However this does not necessarily mean that everyone benefits from

it. This is especially the case in the most third world countries. The benefits

usually go to the elites or sometimes to the ones living a more urbanized areas.

This disrupts the level of equality as the few rich individuals get richer and a

great number of poverty stricken individuals get poorer. This also increases

political corruption. A good example of this is the case in Brazil with the

discovery of oil in the late 1960Us. The level of corruption resulted in an

unprecedented amount of national debt, leaving them worse off then before. In

addition the Brazil suffered a great deal of environmental and resource

degradation as a result of unsound environmental activities from the MNCUs . As

Walter Reid puts it, there a need for Rgovernments to have a responsibility to

invest a share of the national benefits in rural developmentS.

Most free trades also make it more difficult to push a political

agenda. Major power such as the U.S. use economic sanctions on other countries

to enforce their political agenda. Not too long ago, the French government was

engaged in funding for nuclear testing. Most U.N. officials as well as the U.S.

were outraged by the fact that France was not complying with the international

arms agreement. As you know nuclear testing not only encourages the

international arms race, it also has a detrimental effect on the global

environment. However, because U.S. was engaged in a heavy free trade with

France, this made it more difficult to impose an economic sanction. So there is

also a need for more serious political considerations, when being engaged in a

free trade. In this case, the Department of Commerce should have carefully

reexamined the political and military criteria, before a high level of free

trade took place between the U.S and France.

But as the world becomes more integrated socially and economically,

the idea of expanding the international trade will have numerous benefits, if

they are carried out in an RappropriateS manner. After all, free trade promotes

transfer of living in LDCUs as well as improving economic efficiency. This also

allows increase in efficient use of natural resource, which can have numerous

environmental benefits. NAFTA is a good example of an environmental success

where the U.S. EPA and MexicoUs SEDESOL worked closely together to achieve

common environmental goals. Free trades can serve as an instrument that can

increase international cooperation. However it can have an enormous unintended

consequences. Therefore there is a need for more scrutiny in the decision

making process.