By: IFWEA, Pilot ISC Programme

Transnational Corporations (TNCs) now dominate the world economy. For example, the 300 largest TNCs own or control more than one quarter of the whole world's productive assets.This concentration of capital is giving TNCs huge economic and political power. It is a power greater than individual national governments. TNCs bring governments under great pressure not only because of how much capital they control but also because they move it from place to place.

Governments are anxious to keep investors in their country, perhaps believing this is the best way of providing jobs and keeping the economy going. They have willingly or unwillingly agreed to many reforms which benefit TNCs such as weakening labour laws, wage restraint, relaxing or de-regulating health and safety standards, removing exchange controls, privatising national industry and services, cut-backs in public services for the people, and reducing corporate taxes. "We have to do this", governments say, "so that our country will be globally competitive".

These reforms have been carried out in both industrialised countries and in developing countries. In many developing countries they have been imposed by the International Monetary Fund as a condition for financial help after governments got into debt. They are often called 'structural adjustment programmes' (SAPs). The effect of SAPs is to give free rein to TNCs.

The World Trade Organisation is the institution which governs world trade. The WTO also promotes these 'neo-liberal' policies. It has the power to penalise countries which do not open up to foreign capital and TNCs. The three big trading blocs - European Union, NAFTA (North American Free Trade Agreement) and APEC (Asia-Pacific Economic Cooperation) - have similarly developed to compete with each other to offer the most attractive deals to TNCs.