Multinational Enterprises (MNE)

This paper takes the position that Multinational Enterprises (MNEs) do improve rather than exploit foreign labors working conditions on the constitute that globalization has been get intoed by more countries, and that this must be deemed to have s resulted to more benefits for the histrions of these countries who hopeed these MNEs to come in to their countries.The increasing number of countries who want to join the WTO further proves that MNE could thrive to help the economies and working conditions of many. This paper will support with evidence the above thesis by leaning on the irresponsible view of the coin that it is more plausible for multinationals in particular to do good rather than exploit the working condition of foreign countries.When more countries adopt globalization (Editorial, 2000) as economic strategy by joining the WTO, MNEs argon in effect encouraged to do more of their business across countries. To present otherwise that globalization will discourage MNE is simply against theory and human experience. If WTO has the objective of less restricted economic ties among members, more trade investment repose is also expected.This would be consistent with what BIAC (2003) claimed that trade and investment liberalization foster economic growth, creates wealth and improves labor conditions, and will also end up in a better division of labor between countries based on comparative advantage. Liberalization will in turn promote a concentre on productivity improvement, management skills and facilitates integrated links to markets (BIAC, 2003) since globalization encourages the growth of foreign direct investment (Kumar N. and Pradhan J.P., 2002).Countries that have more MNEs have resulted to more benefits for the workers of state countries. The existence of MNE in different countries as evidenced by more foreign direct investments (Hansen H. and Rand J. ,2004) are also proofs of continuing trust of host governments for the near effects of MNEs in terms of more trade opportunities and better life movement of those working in MNEs than their local counterparts.Given these two arguments and their corresponding proofs opposing persons of globalization have their criticism as discussed below.It is being claimed by people who oppose globalization that multinational national enterprises exploit labor in unequal countries. Bhagwati (2005) mentioned the occurrence that anger has been aroused by the supposition that rich, deep-pocketed corporations pay un proficient or inadequate wages to their workers outside their home country and that these MNE are even brand as labor rights violators (Bhagwati, 2005). The line argument of the critics is centered on the assertion that that if a certain branded product sells for $200 in New York, the egg-producing(prenominal) worker or laborer abroad who sews it and for which the MNE paid only 60 cents an hour, exploitation was already believed to be found.A reasonable mind would readily take i n the flaw in the argument as there was no forcing on the part of the MNE to have the female laborer to do the work at 60 cents per hour. It was a free market where a typical entrepreneur would like to produce a product at a lower cost. If the business entity is not an MNE, would there be no exploitation also? The critics argument simply appears faulty in the crucible of common sense. Could it be that MNE which stomach move its goods across countries that solidifies the exploitation? Said argument would be faulty as well since it must be do clear that the MNE still has to turn over transportation cost, distribution cost and even tariff duties in bringing the goods from third world country to the United States.To further prove the lack of chastity of the claim that MNEs pay their workers only minimal wages, Bhagwati (2005) cited a recent study of the profits performance of more than two hundred companies in the 1999 Fortune worldwide 500 list which a very minimal profit on forei gn assets of only 8.3. This means that the foreign companies may just be earning just same or a little above their cost of capital.In countries where there are strong political and economic risks, the 8.3 % could should still be trim back by inflation factor and this could make it lower than the price of just simply making investment in the US treasury bills which ranges just about 4 to 5%. It is therefore very hard to see the evidence of exploitation if the it meant the huge profit despite against low labor costs in myopic countries.Another evidence cited on wage payments were on good empirical studies that have been conducted in Bangladesh, Mexico, Shanghai, Indonesia, Vietnam, and else where these studies revealed that that multinationals actu ally pay an average wage that is above the passing rate in the area where these MNE are located. It was also found that affiliates of some U.S. multinationals pay a higher rate over local wages that ranges from about forty to a hundred (Bhagwati ,2005).In another cited Bhagwati, (2005) cited confirmatory result from that of the economist Paul Glewwe, using Vietnamese household data for 1997-98, Glewwe found that workers in foreign-owned enterprises generally make almost twice the salary of the average worker employed by a local Vietnamese company.What comes out of the comparison made by critics on wages simply misread that needed to be compared. Comparing the salary of a worker in the US with the counterpart worker in another of less economic status is simply faulty. A better comparison is to be made by comparing the life style of an MNE worker than its counter part local worker since the advantage or disadvantage could only be felt in said place. This was seems to be good example of Glewwe finding when the economist pointed out that 1990s increases in Vietnams household income using per capita consumption expenditures as basis of measurement were above the average increases for all Vietnamese households. (Bhagwa ti,2005)There are also accusations that global corporations violate labor rights. Bhagwati(2005) reported that case of where anti-globalization activists having sometimes made and announced lie as in the case of IKEA which was accused of exploitative child labor by its suppliers but was latter found by a German film which has documented that the insult was simply create by activists. (Bhagwati ,2005). Added to the example of faking by activist was the claim that the chocolate sold in rich countries relies on slave labor by children in the cocoa plantations of the Ivory Coast where is found that the stories and charges were false.A more objective analysis of the claims and their arguments would reveal the weakness of these claims against MNE. The lack of employment opportunities for poor countries has truly the government of these poor countries to open up their economies. Opening up their economies allow their labor laws to be flexible enough to allow Mens to blast in the global market (Samuelson and Nordhaus, 1992).To conclude, there is basis to uphold the thesis of this paper as we have proven that the arguments claimed by those who oppose globalization are bereft of evidence or some of these evidences may have been manufactured to their own arguments. Multinational enterprises do not impose their entry upon other poor countries as they are being invited to come into by the other countries act joining the WTO. Such voluntary joining will carry the presumption that these MNE promotes employment generation and help in the economic growth of the countries opening up their economies rather exploit the working conditions of said countries.ReferencesAdewumi (2006) The Impact of FDI on Growth in Developing Countries an African Experience, entanglement document URL www.diva-portal.org/diva/getDocument?urn_nbn_se_hj_diva-711-1__fulltext.pdf, Accessed June 6, 2007Bhagwati, J. (2005) Do Multinational Corporations Hurt Poor Countries? 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