Chapter FIVE gLOBALIZATION AND SOCIETY

OBJECTIVES

• To identify problems in evaluating the activities of MNEs
• To evaluate the major economic impacts of MNEs on home and host countries
• To establish the foundations for responsible behavior
• To discuss some key issues of globalization and society—ethics and bribery, the environment, pharmaceuticals, and labor issues
• To examine corporate responses to globalization

Chapter Overview

Globalization has become a major socioeconomic force and topic of debate in the twenty-first century. While Chapter One examines the forces and criticisms associated with the globalization process, Chapter Five focuses upon the impact of foreign direct investment on home and host countries. Following an explanation of the balance-of-payments effects of FDI, a series of ethical issues concerning the social responsibilities of MNEs is explored. The cultural and legal foundations of ethical behavior are examined, and the challenges of global warming, pharmaceutical sales, and child labor are highlighted. The chapter concludes with a brief discussion of the need for corporate codes of ethics.

Chapter Outline

OPENING CASE: ENVIRONMENTAL CHALLENGES FOR NEWMONT MINING IN INDONESIA [See Map 5.1.]
This case illustrates the effects of the changing and conflicting attitudes of the national and local Indonesian governments toward foreign direct investment. Headquartered in Denver, Colorado, Newmont Mining is the second largest producer of gold worldwide. Nonetheless, Newmont has decided to close one of its two Indonesian mining operations, Minahasa Raya on the island of Sulawesi. As Indonesia evolved politically, Newmont faced an uncertain political and increasingly aggressive legal landscape. Local groups and courts demanded major investments in social responsibility programs. Further, Newmont