Transnational Corporations and International Law

Transnational Corporations and International Law

Accountability in the Global Business Environment

Corporations, Globalisation and the Law series

Alice de Jonge

Transnational Corporations and International Law provides a comprehensive overview of existing laws and principles aimed at regulating the international behaviour of transnational corporations.

Chapter 3: The State and the Multinational Corporation: The Investment Relationship

Alice de Jonge

Subjects: business and management, corporate social responsibility, international business, environment, environmental law, law - academic, company and insolvency law, corporate law and governance, environmental law, human rights, public international law, politics and public policy, human rights


A. THE GLOBAL NATURE OF THE MODERN CORPORATION There is no doubt that TNCs can and do act like participants in an international community. They exert increasing global influence and power, and can and do influence the outcomes of global inter-governmental meetings and the drafting of global agreements.1 Moreover, it stands to reason that the larger the global corporation, the more influence it can bring to bear on national governments and on the outcomes of international negotiations: the largest 500 corporations in the world control 25% of the global economic output. The powers of company management can and do affect others significantly: ‘Managers now have more power than most sovereign governments to determine where people will live; what they will do, if any [sic]; what they will eat, drink, and wear; what sorts of knowledge they will encourage; and what kinds of society their children will inherit.’2 As former Australian Prime Minister Malcolm Fraser noted during his 2001 Deakin Lecture, governments are being downsized while global corporations are growing ever larger and more powerful.3 Governments are losing, if they have not already lost, the ability to regulate or constrain the behaviour of corporations. This process is being propelled by the increasing consolidation of corporate power through global mergers and acquisitions. The decade since 2000 has seen an unprecedented number of cross-border mergers and acquisitions around the world,4 resulting in an expanding network of relations between TNCs and host governments. The relationship between any TNC and the foreign host state...

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