Multinational Corporations, Globalization and State Sovereignty Report

Today, more than ever before, scholars and mainstream commentators are in agreement that a substantial component of the globalization effect is the erosion of the power of the nation state, as international actors such as multinational corporations continue to weaken and incapacitate the state from fulfilling its traditional mandate for the common good of its citizenry (Okogbule, 2008).

This short paper aims to illuminate the negative effects of big corporations and globalization on a country’s political and economic sovereignty.

It is common knowledge that countries in developed and emerging economies are increasingly becoming dependent on multinational corporations to integrate their economies in a globalized world (Kapfer, 2006). In many instances, the bait for establishing the dependency relationship comes in the form of foreign direct investment (FDI) and its capacity to stimulate and sustain economic development of these countries.

By abdicating their roles in the international arena to non-state actors such as multinational corporations, countries soon realize that they are no longer the central actors in international relations, resulting in substantial erosion of political and economic sovereignty.

The multinational corporation Coca Cola, for instance, often uses its international relations shrewdness and globalized networks to dictate to developing countries how to implement tax regimes or whom to elect into a political office.

Multinational corporations are often used by the home government to interfere in the affairs of the host government for political or economic gains (Smith, 2004). Many host governments in Africa, for instance, receive focused challenges to their sovereignty from Western Countries that use multinational enterprises to press for regime changes or accommodation of more ‘democratic space.’

International newspapers have reported how multinationals such as British American Tobacco (BAT) and Barclays Plc were forced by their respective home governments to close business in Zimbabwe in a focused attempt to force the perceived ‘dictatorial’ regime of President Robert Mugabe to embrace ‘democratic’ principles.

To date, economic globalization still remains the major bottleneck to the sovereignty and power of states owing to the fact that many multinational corporations have succeeded in moving both capital and means of production further away from state control into private ownership (Lowi, 2011).

As a matter of fact, many governments in Africa and other underdeveloped countries around the world are no longer capable of controlling the economic situation within their own borders due to the effects of economic globalization. In essence, countries are being driven by market trends governed by multinational corporations without due regard to political or economic sovereignty of these countries.

The 2008 financial crisis, which had its epicenter in the United States, demonstrated how economic globalization can affect state sovereignty in countries thousands of miles away from America.

Nations lose their sovereignty when their cultures are infiltrated by foreign ideologies, beliefs and value systems (Kapfer, 2006). Multinational corporations, with the assistance of globalization forces, have been able to infiltrate cultures, values and belief systems of many third world countries, resulting in far-reaching negative ramifications for people as well as national institutions.

The multinational corporation McDonalds has hit news headlines on numerous occasions for spreading American culture, economic imperialism and hegemony around the world (Smith, 2004). Today, many children in Africa and Asia are living with lifestyle diseases courtesy of the economic and cultural imperialism fronted by a concept labeled as “McDonaldisation.”

It is unsettling to note that multinational pharmaceutical corporations such as Roche and Boots are then charged with the responsibility of supplying drugs to cure the lifestyle diseases, resulting in near total erosion of state sovereignty.

There are many other instances that could be used to demonstrate the negative effects of multinational corporations and globalization on the sovereign will of a nation. However, within the context of a nation’s political and economic sovereignty, it can be safely concluded that multinational corporations and globalization effects have done more harm than good, especially in developing countries.

References

Kapfer, S. (2006). Multinational corporations and the erosion of state sovereignty. Web.

Lowi, T. J. (2011). Globalization, war and withering away of the state. Brown Journal of World Affairs, 17(2), 243-256.

Okogbule, N. S. (2008). Globalization, economic sovereignty and African Development: From Principles to Realities. Journal of Third World Studies, 25(1), 213-231.

Smith, R. E. (2004). Private power and national sovereignty: Some comments on Multinational Corporation. Journal of Economic Issues, 58(2), 417-447.

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