Edited by John R. McIntyre, Silvester Ivanaj and Vera Ivanaj
Chapter 3: Are Multinational Corporations Compatible with Sustainable Development? The Experience of Developing Countries
3. Are multinational corporations compatible with sustainable development? The experience of developing countries Abdulai Abdul-Gafaru INTRODUCTION 1. Over the past few decades, the role of multinational corporations (MNCs) in sustainable development has probably been one of the most controversial debates among scholars. The environment has been at the centre of the controversy. Are MNCs a force for good in the promotion of environmental sustainability in developing countries? Briefly, the right answer is that MNCs are perceived both as the source of and the solution to the problems of environmental degradation. On the one hand, environmentalists are generally pessimistic about the contributions of MNCs to the protection of the natural environment, particularly in host developing countries. Due to their urgent need for employment opportunities, many low-income countries are often compelled to set lax environmental standards in order to attract foreign investors. This problem, coupled with the high costs of conforming to the more stringent environmental standards in the developed world, means that developing countries are likely to remain the ‘havens’ of the pollution-intensive industries of MNCs. Indeed, a number of studies have supported the relocation of ‘dirty industries’ to developing countries. For example, UN Environment Program (UNEP) (1981) provides evidence of relocation of some hazardous industries from the USA to Mexico owing to different environmental standards in these countries. Similarly, Rasiah (1999) points to the transfer of inferior machinery from MNCs to Malaysia because of the country’s lower environmental standards. For Korten (1995: 31), therefore, ‘[e]conomic globalisation has greatly expanded...
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