Big business in the developing world: friend or foe?

Sunday 14 October, 10:0011:30, Garden RoomWhose business is it anyway?


Major corporations are frequently accused of exploiting people in developing countries. As producers, for example, fashion companies selling products in the West – both budget and high-end – have been called out for paying low wages, employing children and for poor working conditions. Extractive industries strip resources from developing countries with little financial benefit to the people there, other than a tiny, wealthy elite, while leaving behind many environmental problems. But big business is also accused of exploiting poorer countries as relatively unregulated markets using their lawyerly muscle to prevent the kind of rules and protections common in richer states. Far from supporting development, big business is accused of extracting wealth.

Others argue that this view is too one-sided. Multinational companies often pay higher wages than other firms in developing countries. If wages are lower than in the West, that may be a reflection of lower productivity rather than simple exploitation. Moreover, developing countries often have much lower living costs than richer countries, so wages that seem very low by Western standards may actually be much better than they seem. By investing in developing countries, it is argued, big business is providing jobs, raising living standards, improving infrastructure and spreading valuable knowledge and expertise, from production to logistics and beyond. Higher standards of production can also benefit poorer consumers. For example, alcohol produced in modern factories is a safer alternative to home-made ‘moonshine’. While natural resources are being extracted, would they be utilised at all if it were not for big business providing the capital and knowledge to do so?

Is big business exploiting the developing world? Have the benefits of investment been outweighed by the costs? Have workers in both developed and developing countries lost out – or do they both gain with jobs and modern products available in the global south and cheaper goods for consumers in the global north? Is the real problem not big business but the lack of political accountability in developing countries, where those in power line their pockets at the expense of the rest?