Impact of transnational corporations on world policy

Defining Transnational Corporations

Transnational corporations (TNCs) are large businesses that operate and have assets in multiple countries.

Power of TNCs in Shaping Global Agenda

TNCs influence world policy through lobbying and funding of political campaigns. Their economic weight can sway public policy decisions at national and international levels.
TNCs can shape global economic policies, by their participation in international bodies like the World Trade Organisation and financial institutions like The World Bank or International Monetary Fund (IMF).

Influence on Trade and Labour Laws

TNCs often affect trade policy, pushing for open markets and free trade agreements which benefit their operations. This can, on the contrary, negatively impact smaller domestic businesses.
They can also influence labour laws in countries where they operate, often resulting in lowered labour standards and pay, in a process sometimes called the ‘race to the bottom’.

Impacts on Environment and Sustainability

TNCs can affect environmental policies both positively and negatively. Larger corporations often have the resource to invest in sustainable technologies, but some are also responsible for significant environmental damage.
Their operations can launch debates and reforms in environmental policies, for example the debate around corporate responsibility for carbon emissions.

Effects on Cultural and Consumer Norms

TNCs, especially those in media and fashion, can greatly impact cultural and consumer norms, and thus influence social policies. For instance, the spread of Western consumer culture can lead to changes in social behaviour and the marginalisation of local cultures.
Their advertising standards and marketing tactics can lead to changes in legal restrictions and health policies pertaining to deceptive advertising and product safety standards.

Balance of Power and Inequality

The profitability and economic size of many TNCs exceeds that of many countries, giving them enormous economic leverage that can be used to sway policy decisions.
The dominance of TNCs can contribute to worldwide economic inequalities. Poorer countries can remain dependent on rich countries’ TNCs, which control the distribution of resources and wealth, whilst exploiting the labour and resources of these countries.

Role in Technological Advancements and Policy

TNCs, particularly in technology sector, drive technological advancements and influence regulatory decisions on digital policy, intellectual property rights and privatisation matters.
These corporations contribute in shaping global policy on information technology and cyber security. Concerns of data sovereignty, data privacy and data monopoly concepts have arisen around these corporations.