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An Alternative Profit: MNCs Role in Poverty Alleviation

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   "Poverty is the worst form of violence." -- Mahatama Gandhi

 It is undeniable that Multinational Corporations (MNCs) play various roles in the development of global economy. Apart from being the "makers' of goods and services, MNCs also play a role in improving living conditions of the citizens in the host countries. It can be argued that the transfer of management, knowledge and technology from MNCs may contribute to a higher living standard in the host countries. Such entrepreneurial and technological skills provided by the MNCs, however, may have little impact on developing local skills and living conditions in the host countries. In fact, the development of these local skills may be inhibited by the MNCs by stifling the growth of indigenous entrepreneurship as a result of the MNCs dominance of local markets. A number of MNCs focus their social responsibilities on resources issues (e.g. human, natural and environmental factors). Even though the United Nations Development Program (UNDP) proposes that poverty eradication must be a shared responsibility among all stakeholders in the international community, most MNCs fail to see their roles in fighting against poverty. Poverty has long been a chronic problem of countries such as Laos, Nigeria, Timor-Leste, Peru and Bangladesh where a numbers of MNCs have long been associated with the local government and business organizations.

Evidently, poverty has been explored by only a handful of MNCs. Poverty eradication is one of the major agendas that national and international actors need to achieve. However, there has been limited international business involvement in the debate. Due to the lack of clarity regarding the role of MNCs and other international business organizations, most MNCs fail to see their roles as one of the long-term contributors to poor people in the developing countries. Furthermore, the absence of the links between poverty, human development and international business at the level of corporate strategy also cripples MNCs' contribution to poverty problem.                         

An academic research published in Management and Decision Journal by Cruz and Pedrozo in 2009 raised an interesting point that, when it comes to corporate social responsibility (CSR), sustainable development is a prime goal for a number of MNCs operating globally. Questions have been raised about the effectiveness and ability of MNCs' current CSR strategy in meeting the goal of sustainable development and poverty. UNDP states that most developing nations are still struggling with key issues such as poor health management, lack of basic education, resources management and unemployment. Poverty is certainly well-linked to these fundamental problems.

MNCs must commit to the community where they locate and care for its people. United Nations Global Compact, in my opinion, is a good starting point for MNCs to identify their operations and responsibilities in order to fight against poverty. As stated earlier, MNCs play an important role in human development. Poverty in developing countries can be ameliorated when MNCs learn to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption.

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Nattavud Pimpa is a senior lecturer in international management at Royal Melbourne Institute of Technology (RMIT University) in Australia. He is also on twitter.com/nattpimpa

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