MENA and MNEs

Small and medium-sized enterprises may be the flavour of the moment in development policy, but the potential role of large multinational firms, or MNEs, should not be overlooked. After all, there is some evidence of MNEs having a positive effect on employment and wages, as well as plugging local suppliers into international markets, which boosts skills, technology and productivity.

On the other hand, some large corporations are associated with investments in countries where poverty is endemic and human rights are virtually ignored. Some admit they have been unable to improve conditions for workers among their local suppliers.

How can multinationals be encouraged to do more for development and improve the welfare of the countries they invest in, as many believe they should? The crisis has focused particular attention on such questions, prompting policymakers to scrutinise the instruments at their disposal.

Take the OECD Guidelines for Multinational Enterprises, for instance. These government-endorsed standards have been embraced by firms the world over to demonstrate their commitment to corporate responsibility, human rights and sustainable development. However, they were last updated in 2000, and a fresh review could, as OECD ministers suggested in June, "enhance their relevance and clarify the responsibilities of the private sector". All OECD members and a dozen or so other countries adhere to the guidelines; at the time of writing Morocco was expected to become the 42nd country to sign up. A special meeting on the MNE guidelines during the 8th Global Forum on International Investment on 7-8 December will identify areas for action. For John Evans, secretary-general of the Trade Union Advisory Committee to the OECD (TUAC), the priorities are to create jobs in the short term and, in the medium term, "to forge a new global economic model to counter a crisis that has engulfed both the developed and the developing world". As he explains to the OECD Observer, involving MENA countries is key: "Ensuring investment is sustainable and meets social, environmental and economic development goals is a key priority. TUAC believes that one of the most effective instruments for contributing to sustainable investment is the OECD Guidelines for Multinational Enterprises.

The guidelines provide a set of recommendations on good corporate behaviour. They seek not only to protect the rights of workers and the environment in international investment, but also to foster good governance through provisions on anti-corruption, transparency and disclosure. While not legally binding, all multinational enterprises headquartered in adhering countries are bound to comply. And adhering governments are required to deal with allegations of violations.

Trade unions from every region of the world have used the guidelines and recently with some successes. We have reached out to develop partnerships with trade unions in the MENA region. The issue for us now is how to ensure that the OECD Guidelines are better respected by investors in the MENA region." RJC

References

Hijzen, Alexander and Paul Swaim (2008) "Do multinationals promote better pay and working conditions?" in OECD Observer No 269 October.

Hohnen, Paul (2008), "OECD MNE Guidelines: A responsible business choice" in OECD Observer No 270/271 December 2008-January 2009.

© OECD Observer, No. 275, November 2009




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