From poverty to power - Oxfam-Québec

FROM POVERTY TO POWERcountries rocketed tenfold from $17bn in 1990 to $169bn in 2005,twice the global flow of aid. This represents a serious capital outflow,cutting into the potential developmental impact of FDI. 154Employment: FDI tends to use capital-intensive technology thatgenerates few jobs. According to the UN, some 70,000 TNCs generate53 million jobs around the world, but this represents just 2 per cent ofthe global labour force. 155Race to the bottom: As poorer countries such as China and Viet Namhave climbed aboard the globalisation bandwagon, the pressure ongovernments to introduce incentives to attract investment has intensifiedinto a ‘race to the bottom’. Governments desperate for foreigncapital and technology are going to enormous lengths to outbid theirrivals. This includes privatisation of state-owned companies, perks suchas tax exemptions for incoming investors, the easing of restrictions onprofit remittances, and the establishment of special export-processingzones where trade unions are banned. Such competition deprivesgovernments of tax income and risks undermining labour rights inthose countries that have already made some progress.Global agreements on a universal floor for corporate taxation, andgreater efforts to ensure global recognition of the core labourstandards of the ILO, could help to reverse the race to the bottom. Inthe end, however, the main responsibility lies with individual states.Governments in China, Taiwan, Malaysia, Singapore, and Botswanahave proved highly effective in getting a good deal out of foreigninvestment. In the initial stages of its take-off, Taiwan insisted onforeign investors undertaking joint ventures with local businesses inorder to accelerate the rate of technology transfer; Botswana negotiatedfavourable deals for its diamonds with South Africa’s de Beers; whileall the East Asian countries improved their bargaining power withinvestors by spending on infrastructure and on health care and educationin order to guarantee a skilled, healthy workforce.As major actors whose activities affect the lives of poor people,transnational corporations have a duty to behave responsibly. What isknown as corporate social responsibility (CSR) has many facets, fromallocating a small portion of the profits to charity, to producingproducts that are of particular benefit to poor people (such as BPdeveloping a fuel-efficient stove), 156 to taking into account the social176