An Unconventional Introduction to EconomicsBy: Diane Coyle

Sex, Drugs & Economics

“Multinationals: Sweatshop Earth?”By: Kyle Bohland

A Synopsis of Chapter 17

Authors Opinion

Multinational corporations are easy, but wrong to condemn for labor practices used in developing countries

Attention has forced multinationals to pay much closer attention to working conditions in developing countries

Basis of argument is that companies are becoming more powerful, but not true

Authors Opinion

Two aspects in explaining the “demonization”

of multinational corporations: Growth of international investment and sales by

corporations Impact of a more open world economy on

governmental policies

Authors Opinion

Investment from one country to another $30 billion in early 1980’s $800 billion in 1999

Proportion of exports in developing country exports to the United States that are exports: 47% in 1990 75% in 1998

Conclusion: companies are transferring production overseas

Authors Opinion

Why are companies transferring overseas? Get away with paying very low, exploitation

wages? Labor cost do make up about 2/3 of total cost of

manufacturing some low-tech goods Get away from environmental standards?

Companies opt for middle income countries, not low income countries

Authors Opinion

Conditions in factories own by multinational companies are almost always better than the local conditions

Many jobs are taken by women and promote independence

Children do not go back to school if cheap labor is not needed Child labor is not desirable, but often better off

than their alternative, like prostitution

Authors Opinion

Corporations have brought more jobs, money, technology, exports, and prosperity to developing countries

Often much better than what a corrupt government could achieve

Conclusion

Globalization has positive outcomes and negative

Governments and corporations have both gained and lost power in some opportunities

No clear conclusion to whether net outcome is positive and negative

Can only work for the future to improve on the past and present