From poverty to power - Oxfam-Québec

5 THE INTERNATIONAL SYSTEM TRADINGIn business, as in politics, size matters. In 2007, Wal-Mart’s salescame to $345bn, more than the GDP of all 49 least developed countriesput together, or of major economies such as Saudi Arabia, Poland, orIndonesia. All told, the universe of TNCs now spans some 77,000parent companies with over 770,000 foreign affiliates. In 2005, theseforeign affiliates generated an estimated $4.5 trillion in value added,employed some 62 million workers, and exported goods and servicesvalued at more than $4 trillion. 102The growth of TNCs has been driven by changes in business,technology, and politics. Improved communications and falling transportcosts have allowed firms to spread production and managementchains across countries in order to maximise profitability; meanwhilestructural adjustment and liberalisation programmes worldwide haveremoved tariff and investment restrictions and have privatisednumerous state-owned industries, often putting them into the handsof TNCs. As a result, FDI in developing countries is growing at some10 per cent a year. In 2006 it reached $368bn, more than three timesthe annual volume of aid. 103While global governance is weak or non-existent when it comes toregulating corporate behaviour, it often imposes rules on governmentsthat benefit companies, and these sometimes damage developmentprospects. TNCs have persistently and successfully lobbied for changesin national policies and in the rules of international trade and investment.In layer upon layer of bilateral, regional, and global agreements,developing-country governments have surrendered the right to regulateforeign investment in their own national interests. Investors haveincreasingly sought to use these provisions not just against expropriationby government, but against any government policy that affects theirprofitability.Corporations have always tried to influence governments, butwith increasing size has come increasing clout. The strong-arm tacticsof the pharmaceutical industry to prevent developing-countrygovernments from overriding patents in order to save lives are notorious.In the USA, pharmaceutical companies spent $759m to influence1,400 Congressional bills between 1998 and 2004, and they employ3,000 lobbyists. 104 Most of these focus on domestic legislation, butlobbyists also play a key role in shaping the US negotiating position atthe WTO and elsewhere.343