How Multinational corporations and human trafficking hold Brazil back from development - Research Paper Example

?Running Head: MNCS AND HUMAN TRAFFICKING IN BRAZIL How Multinational corporations and human trafficking hold Brazil back from development? [Course] [Professor’s name] [Date] Abstract Globalization has increased the establishment of multinational corporations (MNCs) and their operations in less developed and developing countries. These have led these companies in generating huge profits with respect to minimization of cost. They bring great opportunities in the developing countries with employment generation, output expansion, and escalation in technical know-how and so on. But on the other hand it brings many challenges too. Brazil is a country whose economy has escalated in recent years and has encountered a large jolt of foreign investments. A major fraction of these investments have generated from the MNCs forming an indispensible part. In Brazil, these MNCs have propelled its economy, but also have contributed to the increased economic inequality leading to elevated poverty levels, loss of markets for the domestic producers and as well as behavioral aspects like identity loss. This has resulted in hindering the development of the Brazilian economy and also threatens its future. Apart from those social menaces like human trafficking is also hinders development. The paper discusses the ways in which the MNCs and human trafficking has declined development and poses a threat to its future. 1. Introduction The rate of intensification of the terms globalization, internationalization, removal of trade barriers has escalated manifold within the framework of global trade in recent years. Mammoth investments are being made by organizations (Multinational and Transnational corporations) of the developed countries in the underdeveloped and developing countries reaping huge benefits for them with cost minimization. These foreign investments within the underdeveloped and developing countries have brought in a large number of opportunities in the form of employment, cultural integration, regional development of these countries (Tankeu, n.d.). Brazil, a Latin American country, has also encountered large foreign investments with MNCs entering into the country creating employment, local development and thrusting the pace of the economy. But this is only a superficial layer of thinking process. The story is not so simple. A deep scrutiny with evidences and reverse thought process reveal that actually the MNCs are hindering the current development of the country as well as its future. Social menaces like human trafficking have increased to elevated levels hitting the Brazilian economy really hard. Thus, having stated this, the focus of the paper will direct towards discussing the ways in which the MNCs and human trafficking are actually hindering the growth of Brazilian economy and pushing it backwards (Hauge & Magnusson, 2011, p.6). The research question that will be addressed in this paper is, “How Multinational corporations and human trafficking hold Brazil back from development?” 2. Research track: For addressing the issue in a proper and transparent manner prior discussion needs to be done with the current situation of the country with respect to development status done under the heading present situation. Within it, the first segment deals with the concept of MNCs acting as hindrance to development. The next section presents data support of the country with respect to its development. After that, the subsequent section will deal with the problem of human trafficking in the country. Then the course of the paper will enter into the hardcore process of analyzing the country’s development hindrance due to MNCs followed by discussion of the issue of human trafficking. 3. Present situation 3.1 Alarming truth –MNCs in development shrinkage The trajectory of globalization through empirical evidences has been seen as two way traffic. At one end, it has acted as a force delivering economic prosperity to people all over the world and on the other hand, it has been blamed for creating huge inequalities making the rich richer and the poor poorer. Multinational companies (MNCs) are one of the devices held responsible for this situation. Analyzing from the laws of economics, it can be stated that the MNCs leads to an environment that is anti competitive. They also lead to territorial allocation of markets. The companies exercise heavy market power acting as strong barriers to entry for the competitors. The end result is unwanted monopoly generation resulting in economic exploitation (Rao, 2008). 3.2 Linkage of the above notion with Brazil-Evidential back up Brazil is the ninth largest economy in the world. Although it is a growing economy and ranks in a higher order of the world economy, the country is predominated with enlarged pockets of social and economic inequality in the world (Brazil, 2012). In the year 2005, 10% of the richest population in the country earned 48% of national income but, more than 40 million Brazilian earned less than two dollars for a livelihood. A large percentage of the young Brazilian population finding no fruitful job opportunities left their homeland and found employment in developed countries like USA, Japan and Europe (Brazil, 2012). The current situation of Brazil is also shocking. From the country’s statistical bureau, it has been revealed that in the year 2011 around 16.2 million people still thrives on an amount of Brazilian currency 70 per month equivalent to around US$1.30 per person per day (Croix, 2012). Among these, 16.2 million people, 4.8 million people survive on no income and the income levels of the remaining 11.4 million have the income levels between Brazilian currency 1 to 70 per month. The minimum wage rate is only US $361. This is indeed a very minimal amount with cost of living scorching the common people out (Croix, 2012). 3.3 Human Trafficking in Brazil The country of Brazil is one of the worst affected countries by human trafficking. It is a hub where children and women get sexually abused every day (Brazil, 2012). The women of the country are given false offers into various regions within the country as well as in the neighboring countries or to that of Western Europe, Japan, the United States as well as the Middle East. They are eventually dragged into prostitution. A positive correlation exists between sex tourism in the coastal cities of Brazil and trafficking of women. The children are enslaved as domestic servants. There is also rampant trafficking of the men in the agriculture where the working conditions are slave like. The areas where they are trafficked are the Brazilian states of Amazonas, Mato Grosso and Para (Brazil, 2012). Thus, having a short insight on the development paradigm and severity of human trafficking we will now enter into the mainstream discussion of the paper. The following section will be discussing the role of MNCs in hampering development. 4. Multinational Corporations hindering development 4.1 Idea of the educated mass A sizeable proportion of the educated Brazilian mass views globalization as an exposition of homogenization, identity loss as well as the imposition of dominant practices by the multinational companies of developed countries (Jordao, 2012). The educated Brazilian mass perceive globalization to be acting as a domination procedure by the foreign countries that are accepted by the national governments and hence hindering the long run development process of the country with intensification in social and economic inequalities (Jordao, 2012). 4.2 Capitalism- Difference between the organic nucleus and peripheral group The theory of capitalism can be incorporated into the discussion for better understanding the process. Capitalism is basically a social formation where markets and commodity production are pervasive (Hauge & Magnusson, 2011, p.15). Capitalism leads to expansion and diversification of various markets. With intensification of capitalism, there generate huge demand for skilled labor adding to the development of educated middle class. Along with the increase in the investments of the middle class there generate inequality within the educational outcomes. The increase in education tends to have a larger impact on labor. There is a development in general skills, awarding general education. This in turn leads to a more repressive distribution of income and the mechanism hits hard the section of the people who possess low educational competencies. The society then turns into an individualistic state and the people will not be eager to share their wealth. The notion of establishing a welfare state slowly dissolves away and the poor gets victimized. Increased capitalism increases the demand for the general skilled labor leading to increased inequalities and minimal welfare state (Hauge & Magnusson, 2011, p.15). . Fig1. Flow diagram showing capitalism generating economic inequality(Hauge & Magnusson, 2011, p.15). Capitalism fragments the international division of labor into two parts. They are organic nucleus and peripheral group. The organized nucleus exercises monopoly over the technical progress and enjoys advancement (Singer, n.d., p.49). The productivity of this group is always higher and it authorizes its supremacy over consumption to semi-peripheral and peripheral countries transmitting technological advancement and scientific theories and political ideologies. The peripheral group gets subordinated vehemently and organized groups extract the most of the profits and appropriates for them by magnifying the economic inequalities among the people (Singer, n.d., p.49). This situation can be strongly correlated with Brazil. 4.3 Borrowed managerial style leads to identity loss In many Latin American countries, managerial expertise is often drawn from the developed countries like the USA or Europe. These managerial practices have been implemented as bench marks often not adjusted with the home culture. The Brazilian business education has been largely depended on the Northern (developed countries) models with public education being drawn from the influences of Europe and the private education system directly linked with US support and investment. The Brazilian managerial knowledge and practices have been found to be an amalgamation of complex negotiations between cultures and appropriations of foreign practices. They are largely different from the expressions of the home culture. The indigenous Brazilian population has always found difficulties with matching up with the European culture and unorganized sector became rampant. The authentic essence of Brazilian self perception goes against the attributes of Brazilian self-perceptions focusing on encounter and negotiation between ways of life. Studies of Wood and Caldas (2006) have stated that, “warning not to read foreign borrowings at face value” (Islam, 2010). The researchers state that these borrowings can reveal different meanings. This is especially true when this is applied to the Brazilian firms in comparison with the other countries. The researchers point out those managerial practices is adopted for flaunting symbolic value rather than instrumental value. Practices like ISO certifications are revealed through English for representing Brazilian saying. This signifies to the institutional legitimacy to the managers who are using it. This gives the impression that the firm is up to date with the state of art in the global industry. In this way the Brazilians are losing their identity and colonialism is seeping into Brazilian economy. This is occurring in an indirect manner with the authorization of supremacy of the Western cultures within the organizations. This creates cultural inequalities hampering development and posing threat to the future development of the country. The nationals have to be alert about this so that they do not lose their identity. The identity crisis is a major factor creating gap in the society making a handful better off but majority in a worse off situation (Islam, 2010, pp.9-10) 4.4 The degenerating car market The domestic car companies in Brazil lack in competition with big multinational car companies. Many of the cars produced by the national companies are not equipped with air conditions, air bags, and automatic transmission and so on (Marcos, 2012). The multinational companies like Chryslers, Audi, Mercedes, and Volkswagen and so on produce better cars. But these cars come at enormous prices, even for the cheapest model that are greatly unaffordable by the common masses of the country. In this way the domestic car producers are losing their market without cost recovery and the foreign companies are sending back huge revenues to their countries. The inequality is also spreading at a rapid pace. Thus, the development dimension is hampered in a rapid scale and the future can be seen at stake (Marcos, 2012). 4.5 Ambev’s Scandal Ambev incorporated is a multinational company in Brazil leading in the beverages markets. The company and its subsidiaries are in the process of producing, distributing and selling beer, carbonated soft drinks as well as other non carbonated products around 13 countries across America. The operating unit of the company works through Latin America North, Latin America South and Canada (Companhia de Bebidas das Americas Ambev (ABV), 2012). The company with its large operative revenue has created monopoly in the Brazilian market and with foreign support it has exercised various anti competitive policies that have hindered the development process of the nation. The company has been charged a fine of 352 million Brazilian reais for executing such practices (AmBev’s true face revealed, 2009). The company is a brewer of other beverage companies like Skol, Brahma and Antarctica beers applied discounts, premiums as well as exclusivity agreements in dissuading retailers from selling competing brands. Apart from fine imposition, the authorities also ordered the company for discontinuing loyalty programs including an exclusivity clause. Due to Ambev’s unfair practices, smaller companies like Nova Schin and Kaiser encountered a dip in their sales percentage by around 20 percentages (Brazil fines AmBev $176 mn for anti-competitive practices, 2009). Thus it can be said that the MNCs have hindered the development process of Brazil and through the above discussions it is also revealed that the government is also lacking in controlling the same. Now we move on to our discussion regarding human trafficking. 5. Human Trafficking- A driver of underdevelopment 5.1 Child Trafficking in Brazil Human trafficking is one of the social menaces hindering the development trajectory of any country. Child trafficking is rampant in Brazil and with the destruction of the potential of the children; the future of economy is literally jeopardized. The nations with high child slavery rates is sacrificing the next generation of leaders in business, government sector as well as other areas of the productive society (Hanlon, 2011). The trafficking of children for sex in Brazil has increased to epidemic levels ranked after Thailand. A large section of the Brazilian population finds them engaged in this obnoxious trade having lost the chance to develop as a child. Unfortunately, the filthy people who are engaged in the trade of child trafficking visualize this sector to be a booming sector. Brazil is hosting the 2014 World Cup and 2016 Summer Olympics. The traders know that although this mega event is still some years to come they view its potentiality and know that a huge section of the tourist will come in this nation for enjoying sex by paying and damaging the lives of the country’s future (Hanlon, 2011). 5.2 Poverty leading to forced prostitution Reports of World Bank reveal that the people who are trapped in poverty, face several obstacles in income mobility with unlikely benefits from commercial agriculture, technological innovation or migration. Lack of economic opportunities has led the poor mothers in prostituting their own daughters to the foreigners. This has become an accepted practice in Brazil. In Brazil, the mothers prostitute their daughters to the foreigners so that they can get a better life in Europe and the US (Dale, 2010). A BBC reporter at a bar in Brazil where foreigners met a girl who claimed that her age was 19, but she looked much younger. Paula was with her mother in the bar. Paula explained that she was in search of a man who could take her to Europe for giving a better life and further added that her two sisters were already in Germany. It is really shocking to see that a mother is prostituting her own daughter. In reality, the laws of economics play an important part in this case. There is an excess supply of young girls who are trying hard to get rid of poverty and this excess supply is being compensated by an increasing foreign demand. The market is booming in this way with equilibrium prices settling at elevated price levels. This is really a curse of globalization that are thrown towards these countries (Brazil struggles to curb sex tourism, 2004). 5.3 Negligence of the government There is non-compliance on the part of the Government of Brazil regarding the minimum standards related to the elimination of human trafficking. The authorities are stressing on the investigation process of sex and labor trafficking crimes, but the data collection on trafficking prosecution and convictions remain a challenge. Through mobile labor inspection alone, 2800 potential trafficking victims were identified (2012 Trafficking in Persons Report – Brazil). The growing demand for sex trafficking is coming from countries like Germany, Italy and other European countries. The labor laws are not stringent here. The age of consent in Brazil is 18 years but a huge section of the population is much younger. The government of Brazil also does not pursue an active immigration policy and entry into Brazil is made very easier by weak assessment by the National Immigration Council (Brazil, 2012) 5.3 Recommendations Some recommendations are laid down directed towards helping the country in fighting human trafficking. There should be an increase in the efforts for investigating as well as in the prosecution of trafficking offense. Conviction and sentences should be given to the trafficking offenders who are involved sex trafficking internally. There should be increase in the dedicated funding for specialized assistance, shelters, and protection for victims of sex trafficking and of forced labor, in partnership with civil society. The government should also impose vigorous investigation procedures for prosecuting the person engaged in child prostitution, sex tourism. There should be also amendments in the legislation for applying more stringent sentences for the offenders of child trafficking, strengthening of the interagency mechanisms at the federal, state, and local level with enhancement in the collaboration between the entities of government involved in combating human trafficking. The internal training for the local level law, enforcement officers, judicial officers as well as labor officials, social workers will have to combat trafficking with strong hands and strengthen partnerships between the government and the business sector for encouraging voluntary efforts made by companies in eliminating forced labor (2012 Trafficking in Persons Report – Brazil). 6. Conclusion The full length discussion leads to the development of a philosophy that globalization thrusts the Brazilian economy, which is indeed a positive thing but at the same time created large pockets of inequalities among different economic classes of the society. The absolute poverty has decreased, but the relative poverty increasing to magnified levels. The MNCs have injected mammoth investments in the country benefitting only a part of the society and driving majority of the population in acute poverty. With the demand for skilled labor only a part of the society gets well education and there occurs a brain drain and the native people go out of the country and seek employment in foreign countries. Foreigners dictate the managerial environment within the MNCs and the Brazilians are gradually losing their identity. The domestic market of the country also gets hampered due to high technology used by the MNCs and the prices charged by them. The Brazilian MNCs like Ambev have gained monopoly in the Brazilian market and with foreign influence have exercised unfair trade practices hampering the small companies to develop in the market that is another sign of underdevelopment. Finally, with enormous levels of poverty, human trafficking is predominant in a large scale with high demand of prostitution from the countries like USA and the European countries. The adverse effects have been so much that mothers are sending their child to prostitution so that they can lead a better life devoid of poverty. In this way the human capital is getting wasted. This is indeed a robust sign of underdevelopment. The country has to rise up and take proper steps so that the future of the country is protected now as well as in the long run. 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