Globalization, Multinational Corporations, and Corruption

Corruption scandals that sometimes make headline news in Western media can often be worse in developing countries. This is especially the case (as the previous link argues) when it is multinational companies going into poorer countries to do business. The international business environment, encouraged by a form of globalization that is heavily influenced by the wealthier and more powerful countries in the world makes it easier for multinationals to make profit and even for a few countries to benefit. However, some policies behind globalization appear to encourage and exacerbate corruption as accountability of governments and companies have been reduced along the way.

For example,
For multinationals, bribery enables companies to gain contracts (particularly for public works and military equipment) or concessions which they would not otherwise have won, or to do so on more favorable terms. Every year, Western businesses pay huge amounts of money in bribes to win friends, influence and contracts. These bribes are conservatively estimated to run to US$80 billion a year—roughly the amount that the UN believes is needed to eradicate global poverty.

— Dr Susan Hawley, Exporting Corruption; Privatization, Multinationals and Bribery,
The Corner House, June 2000

Dr Hawley also lists a number of impacts that multinationals’ corrupt practices have on the “South” (another term for Third World, or developing countries), including:
They undermine development and exacerbate inequality and poverty.
They disadvantage smaller domestic firms.
They transfer money that could be put towards poverty eradication into the hands of the rich.
They distort decision-making in favor of projects that benefit the few rather than the many.

They also

Increase debt;
Benefit the company, not the country;
Bypass local democratic processes;
Damage the environment;
Circumvent legislation; and
Promote weapons sales.