International

INTRODUCTION

Globalisation is undoubtedly a controversial issue. A good idea of the controversial nature of globalisation is captured in President Jacques Chirac’s remarks at the G-7 Summit in Lyon earlier last year when he said: “Globalisation links everything from the efforts to alleviate the debt burden of the poorest--mainly sub-Saharan African countries--to the fears for jobs and security in the advanced industrial countries. Its central paradox is that, since the Second World War, industrial countries have tried to assist developing nations, but now that some are developing quite well, the industrial countries are scared of their own shadows.”

It is fair to say that views on globalisation are often coloured by the perception of the ability to participate in globalisation. What really troubles the industrialised countries--and the G-7 in particular--is the impact of globalisation on themselves, especially the consequences of relocation of demand and production to low wage/low cost developing countries. In this context, globalisation has been put forward as the major reason for the unemployment problems of unskilled or low-skilled men in industrialised countries.

We have all heard some politicians--such as Ross Pert and Patrick Buchanan during the US Presidential Elections and Sir James Goldsmith in Europe--and trade unionists maintain that: “The Third World is snatching away our jobs.” The developing countries themselves are fearful of increased protectionism in the wake of soaring unemployment levels of unskilled workers--particularly in Europe. There are also fears of more sophisticated protectionism to guard against a 'race to the bottom' in social or labour standards--that is, the incentive of transnational corporations (TNCs) to move to areas with less stringent social and labour standards in the developing countries resulting in lower standards in general. This phenomenon has often been called "social dumping".

On the other hand, there have also been significant fears expressed by developing countries that TNCs have increased control of their corporate assets and threaten to control and determine the pace of their development and participation in the globalisation process. In particular, the fear is that the

emerging dominance of TNCs may greatly reduce their autonomy and sovereignty as smaller countries in particular are forced to rely on large firms as sources of supply. The basis for such fears are recent figures which show that the value added of all foreign affiliates of TNCs accounted for 6 per cent of world GDP in 1991 compared with 2 per cent in 1982. Or, figures such as those reported in The Economist not so long ago that there are roughly 35,000 TNCs with the largest 300 of these accounting for one-quarter of the corporate assets in developing countries. In 1995, for example, TNCs invested over US$2.7 trillion in their foreign affiliates. These are enormous amounts of investments.

2.