Is a Green-Left Vision of a Localised Economy Without TNCs Achievable - Case Study Example

Is a ‘green-left’ vision of a ‘localised’ economy without TNCs achievable? Introduction Green left can be defined as a party whose ideology is based on anti capitalism standpoint. It is a communist party that was formed in the Netherlands. Local economies are those which are based on the business of the domestic firms. They are mainly involved into the business which covers the local and regional economies and the money is never flown out of the community. However the anti-capitalist view of green left parties would be viable only when the local based business flourish with the necessary capital and skills. While it is true that presence of transnational companies might hamper local growth of businesses, in their absence again the local businesses might not have the competitive technology or the skills to produce the products according to the demands of consumers who will now try to buy online or from other international companies. Capital is also important and the TNCs bring in foreign capital into the local economies. However they are also dependent on local economies for labour and land. In their absence the workers might decide to move out of the locality in search of better opportunities. In this context the paper addresses the question - Is green left vision of a localized economy without TNCs achievable? According to Richardson and Rootes (1995), Green Left (in Dutch – ‘Groen Links’) is a new political formation that took birth during 1989 Dutch national election. The “Green Left” was officially founded on November 1990. (Richardson and Rootes, 1995, pp 111-119) The main assumption of the Green Left is that Capitalism has a negative effect on the planet and promotes conflicts and war. According to them the basic principles of green society should be developed on civil, economical and political justice. Democratic structure within the party is encouraged along with an emphasis on transparency and accountability. (“Launch statement of Green Left”, n.d.) The humanity today faces a severe choice between ‘eco-socialism’ and ‘crudity’. Capitalism has added ‘fuel to the fire’ as the air and water are badly contaminated and poisoned by the global warming. Multinational brands will go increasing their profits and by doing so deforestation will take place as new industrial belt will be required for more production of goods. This also makes the availability of agricultural lands scarce and yield of crops drastically falls. To counter the by-products of globalisation, focus must be given on strengthening of the local economy. (EcoSocialist Manifesto: 2nd Draft, n.d.). The greatest advantage of local economies is that they are very small in size and do possess certain features which are very much suitable and consistent with respect to the locally developed markets. Another important feature of the local economy is that the wealth they create does not flow out of the community. It stays for a long period of time. In an economy local business sector is like an insurance policy, always safeguarding the interest of people. In a study it has been found that local economy always thrives by three times in terms of ‘jobs’, ‘revenues’ and ‘tax benefits’. Local economy also attracts businesses that enter into it and take the advantage of the easily accessible skills of the local people. This is also defined as a ‘creative economy’. This will also be more creative in the coming years as it will generate jobs and attract large investors. In local economy it happens that the neighbourhood businesses tend to support the local enterprises and this strengthens the regional economy. How can the local economy survive in this world when so many foreign companies are intervening into the other countries? The general public need to support those public officials who promote policies that strengthen the locally owned businesses. Local government has to be involved in the promotion of this type of economy. Reduction must be made in the subsidies so that the chain of corporations can be positively influenced. Additionally, huge spending is required on the local enterprises. Local economy also plays a very important role in creating a green economy. Educating the family members can popularize the significance of the ‘local green economy’. Going for collective food, shopping and looking out for natural, locally manufactured food that is certified by the “Fair Trade” is one step closer to achieving the ‘local green economy’. To add more power to the local economy, employees can encourage their organisation to consider ESOP (Employee Stock Ownership Plan). (Danaher, 2007; Biggs, 2007; Mark, 2007 pp 244-247). The basic reason behind showing the need of local economies in comparison to the foreign companies is that the foreign companies always try to match the other MNC’s by producing more goods so that their market share remains intact. It is a fact that when more production is required it will lead to expansion, which will involve in deforestation and global warming. In case of local economies the competition is not huge and the money is kept within the community. TNCs do have a common strategy and decisions are virtually taken from one or more decision-making centres. These centres exercise a sizeable influence on the working activities of the others. Another key role of this organisation is to share ‘knowledge’, ‘resources’, and ‘responsibilities’ with others. (Jones, 2006; Wren, 2006, pp 10-11) TNCs are not that properly regulated at the global or international level. The closest they have come in being globally regulated is through the use of voluntary ‘codes’ and ‘principles’. OECD (Organisation for Economic Cooperation and Development) set up certain guidelines in the form of an agreement for the transnational companies which have been discussed below: All the category of the economy should be opening up for the foreign investments. National interest should not be given too much of emphasis. Equal treatment must be provided to the foreign and household firms. Local resources will have to be removed. Capital transference, which would include profit movements between countries, will not be restricted. The foreign authorities had the authority to sue the local government if it was found that local rules violated the rules set up by the OECD. It was mandatory for all the states to comply with all the rules of OECD. (Fuller, n.d. pp 25-38). Inter firm linkages are the most important channels through which technological changes are transmitted. The experience acquired in terms of innovative technologies by local firms makes it easy for them to compete in the wider markets on the condition that they are not bounded only to a specific customer. The expanded activities of supplying firms and of ancillary firms involve the activities related to transportation and distribution which result in the creation of additional employment. This kind of benefits can only be executed if the TNCs do link up with the local firms. The linkages will help the local economy to go for the backward or supply linkages. The crucial issue that needs to be assessed in case of the TNCs is that either they have to import materials and components or procure them from the local suppliers. TNCs which are strongly vertically integrated at a global scale are more likely to establish local supply linkages with firms that have a high level of corporate integration. The local firms are stimulated due to the presence of TNCs. When a TNC enters the host economy, the later may have a cascading effect on the framework of domestic industry mainly on the survival of competitiveness and origin of domestic businesses. However there are certain negative aspects too which need to be considered in case of TNCs with respect to the host economies. Possible squeezing out of existing markets and keeping a suppressing attitude towards the new domestic enterprises are a major worry when we speak about the TNCs. Where substantial local linkages are forged by foreign plants particularly on the supply side there will be an opportunity for the local businesses to enhance. In general, the new firms do face entry barriers from the TNCs, but they may be required to respond to the demand for materials or components. The formation of new enterprises in the local economy will largely be based on the concept of spin-off where the managerial staff sets up their own business on the basis of their experience and skills gained in employment with foreign firms. TNC will also create jobs in both direct way and indirect way. (Dicken, 2007, pp 464, 467, 468). TNC also adds value to the local economy by retaining the foreign exchanges as it has linkages with the local firms. This foreign currency retained locally will add more positive value to the development of the economy. The transfer of technology by the TNC is to the state-of-the-art rather than merely being technology that is outdated or unproductive in the context of developed economies and the more it is diffused among local firms the greater the benefit to the local economy. The more equal the distribution of profits and income generated by the TNC subsidiary as between corporate headquarters and foreign shareholders on one hand, and local social classes and governments on the other hand, the greater is the benefit to the local economy. (Sklair, 1994, p. 273) One of the major developments was seen in New Zealand when the Greens, the New Labour Party, the ‘Maori Self Determination Movement’ and other small parties came together to form an association of green parties. The main assumption of the Green Left is that Capitalism creates a negative impact on the planet and promotes conflicts and war. According to them the basic principles of green society should be developed on civil, economical and political justice. (Richardson, 1995; Rootes, 1995, pp 111-119. Voerman, n.d.; Lucardie, n.d. pp 1-2. “Launch statement of Green Left”, n.d.) However in real scenario we have to focus on the importance of globalised economy and its impact on the local economy. Transnational Companies are the best examples of global economy and are the organisations which have an international appeal too. The key function of a TNC is to share ‘knowledge’, ‘resources’, and ‘responsibilities’ with others. (Jones, 2006; Wren, 2006, pp 10-11) Conclusion Considering the over dependence of TNCs it can lead to a downfall of the local economy too. So we need to build a situation which acts a perfect foil to both local economies as well as for the transnational companies. Hence we need to focus on the attractive side of the local economy. In case of local economy the greatest advantage is that they are very small in size and do possess certain features which are very much suitable and consistent with respect to the locally developed markets. The wealth that they create is kept in the community itself. It is not flown out of the community. Local economies have always supported the economy by creating jobs, revenues and proving government with huge amount of taxes. This will be more creative in the coming years as it will generate jobs and attract large investors. In local economy it happens that the neighbourhood businesses tend to help the local businesses and this helps in strengthen the overall economy of the nation. (Danaher, 2007; Biggs, 2007; Mark, 2007 pp 244-247). This helps in exchange of the technological benefits. This will help the local markets in a broader way as the experience gained on the technological front will help them compete with the big transnational organisations. In case of transnational companies the benefits it provides to the local economy can be in the form of providing jobs to the unemployed persons. It helps to retain the foreign exchange currencies when the business dealings are made with the local enterprises. (Sklair, 1994, p.273). Hence it can be said that whatever the motives of green left parties are, localised economy has to be built with the help of TNCs. An economy in this globalised world cannot sustain if it produces and sells goods only to its communities. It has to encourage the multinationals and hence with international economies in order to develop its economy. Only a genuine intervention by TNCs will ascertain that the needful capital and developments take place in the local economy. Bibliography & References: 1) Danaher, K., Biggs, S., & Mark, J. 2007. Building the green economy: success stories from the grassroots. California: PoliPointPress. 2) Dicken, P. 2007. Global shift: mapping the changing contours of the world economy. London: SAGE Publications Ltd. 3) “EcoSocialist Manifesto: 2nd Draft”, n.d. Available at: http://gptu.net/gleft/glesoc.shtml (Accessed on Nov, 4, 2009) 4) Fuller, C. n.d. Governing Global business. Lecture Notes, University of East London 5) Jones, J., & Wren, C. 2006. Foreign direct investment and the regional economy. Surrey: Ash gate Publishing, Ltd... 6) “Launch statement of Green Left”, n.d. Green Left. Available at: http://gptu.net/gleft/glhcorn.shtml (Accessed on Nov, 4, 2009) 7) Richardson, D., & Rootes, C. 1995. The Green challenge: the development of Green parties in Europe. London: Routledge. 8) Sklair, L. 1994. Capitalism and development. London: Routledge. 9) Voerman, G., & Lucardie, P. n.d. “The Organisational and Ideological development of Green Left”. Available at: http://dnpp.eldoc.ub.rug.nl/FILES/root/publicatieLucardie/greenleft03/GreenLeft.pdf (Accessed on Nov, 4, 2009). Word count: 2,459 (Excluding bibliography, in-text referencing and references) Read More