The contemporary global economy is inherently characterized by capitalism which in turn provides for a free market enterprise. The key players in this mode of production are multinational corporations which are the most powerful agents of Foreign Direct Investment which takes the form of cross-border corporate governance. This scenario involves the establishment of an enterprise by a company by investing in foreign countries. They own 10% or more of the ordinary shares in their affiliates and control the same percentage of voting power. McDonalds, Boeing, Shell, Microsoft, the now defunct A.I.G., to mention but a few, are examples of such corporations.

These corporations derive a great deal of strength from their enormous size. Their economic prowess often translates into political power which they sometimes use to advance their interests in their host countries. Multinational corporate lobbying, for instance, is directed at a range of business concerns, from tariff structures to environmental regulations. Multinationals often undermine political sovereignty of their host countries. A syndicated journalist, Jack Anderson, once alleged U.S.A.’s involvement in the situation in Chile that saw the ouster of democratically elected communist, Allende Gossens, by Pinochet. According to Anderson, a vice president of International Telephone and Telegraph Company, ITT, purportedly wrote to the White House urging it to make Chile in effect favorable for ITT in an effort to alley fears of nationalization. This was widely seen as a case of foreign interests infringing on domestic affairs of a sovereign state. Many companies lobby international agreements to enforce patent laws on others directed to inhibit potential competitors from arising. Siemens A.G., for example, holds patents on equipment and infrastructure. In an effort to aid technology for local entrepreneurs, especially in the case of provision of essential commodities like medicine, a country may require multinational pharmaceutical companies to license their patented drugs to local competitors for a very low fee. Faced with such a threat of losing a core competitive technological advantage, multinationals usually threaten to withdraw from the market forcing them to review their policy.

Multinationals view developing countries as dumping sites for substandard and obsolete technology. They also enforce sharp class divisions in these states by creating show of class that did not hitherto exist. They achieve this with the help of the economic and political elite who pose as junior partners of foreign interests who in turn parade as advocates of development in their countries. A certain analyst, who sought to remain anonymous, wrote about a shadowy organization that had infiltrated the International Bank of Business and Credit. This organization funded conflict a particular third world country by enormously funding an incumbent regime. They provided small arms to rebels in the same country and funded them heavily as well. The aim was to control the debt that was required to revive the country from the destruction caused by the conflict that ensued.

The adverse effects of multinational corporate interest in vulnerable countries are bizarre, to say the least. Worse still, they are conglomerates and can’t be checked by proverbial cutting of the head of the snake. To that end, most of the developing countries remain impoverished with over two thirds of their population wallowing in poverty, misery and disease.