Policy Competition for Foreign Direct Investment - Case Study Example

Multinational companies have an upper hand on governments in developing nations. The developing nations have the need to grow. They need large multinationals to stimulate economic growth. This country is rich in oil, a valuable resource. The multinational company dictated the terms of operation in that country. The government agreed to these terms at the expense of the citizens. (Oman 78) This shows weakness in the government. The politicians are more driven by short horizon policies that achieve economic growth and are blind to the long run impact on citizens and the economy.

The agreement was made between the company and the politicians. Most politicians do not have the relevant skills to make such decisions as oil exploration. Multinationals take advantage of the illiteracy levels in developing nations to get ahead in business. They are, after all, large private companies whose priority is to make profits. In achieving this objective, it created employment for the locals. Increased income of the local employees improved their living standards. The host country GDP improved as a result of the Chevron operations.

These are the benefits that the previous government sought to achieve. . The government is in a position to set up public hospitals and dispensaries to take care of the local community health needs. This case shows the failure of eh government in setting its priorities straight. It also indicates a lack of national sovereignty. The multinational dictates its terms of operations in that country. This s was done to favor its own objectives. The government in a developing nation is powerless in the presence of a large multinational.

Who protects such governments? Where were the World Bank and the UN? The safety of people, the environment and national sovereignty should be the responsibility of many bodies and not just the government. (Oman 112) The multinational in this case has failed in the following ways. First, it overlooked the global environmental laws that require proper waste management. It used its power and resources to manipulate the previous government into agreeing to its terms of service and keeping quiet on the harm the company caused.

As a responsible company, it should have engaged in some corporate social responsibility. This includes but is not limited to treating waste before disposal, construction of a health unit to address the community health needs. Chevron management ignored all these. The current government realized the problem in the previous arrangement. Unlike the past weaker government, it has gone ahead and sued the company. The refusal of the state to settle is a clear indication of the care it has for its citizens.

Although the company sues the state for negative publicity, the company is on a losing battle from moral ethics stand. A mistake was done; it should have e been addressed in all ways possible.