Foreword

By Swamy, M. R. K. | Journal of Financial Management & Analysis, January-June 1998 | Go to article overview

Foreword


Swamy, M. R. K., Journal of Financial Management & Analysis


Research studies have confirmed that multinational corporations (MNCs) parented in developed (industrialized countries, through their subsidiaries (in developing countries), with selfish interests like gamblers, begin the game with a small stake (initial investment) and continually plough back their winnings (taking advantage of good political risks) into the game of gambling making the parent MNCs grow richer through abnormal profit earnings of anywhere between 400 per cent and 600 per cent on one hand; and, on the other hand, the developing countries, acting as gambling dens with MNC - supported management consultancy-cum-financed expensive loans (like Euro-dollar) and through transfer of sophisticated and inappropriate technology from the industrialized countries - all in the name of so-called economic development - would continue to remain in a state of yolatile-cum-inorganic development path causing techno-economic backwardness from a long-run point of view. With stringent controls exercised over MNCs in recent years, developing countries have put all hands on deck to move from a state of over-dependence of MNCs to techno-economic self-reliance and the MNCs, finding gambling a losing game in developing countries, have engaged in employing techno-management techniques (like transfer of highly priced-cum-most sophisticated and inappropriate technology-on one hand; and, forcing MNC - controlled developing countries to maintain very high and unrealistic - not functionally related to economic development - values for their currencies which, in the words of M. R. Kumara Swamy, proves a doom to the developing countries and a boom to the MNCs (for facilitating continual abnormal profit repatriations) to strength their monopoly power as explained below:

Hi-tech manufacture/production -4 may lead to negative cash flows -4 induces risk capital and prompts MNCs to - underutilize productive capacity and -- engage in arbitrage and earn abnormal profits of anywhere between 400 per cent and 600 per cent profits s proves a boom to MNCs parented in developed countries and a doom to MNC - controlled developing countries - leading to development tension via technological backwardness.

Sway, M. R. K., Why Do Developing Countries With Inadequate MIS Land into External Debt Trap? A Financial Management Analysis Journal of Financial Management and Analysis (July-December 1989)

From a different perspective, it may be pointed out that the marriage between ethics and business has not been a happy one and divorces are frequent due to inherent contradictions between selfish and selfless motives of individuals/financial institutions via-a-vis business. There is a human tendency to cover up, to assume that the future will be better and that everything will come right. The human mind has a great ability to deceive itself and direct itself along predetermined channels. A corporation as such has no conscience, no feelings, no consciousness of its own. It has conscience only to the extent that those who make it up act for it in such a way as to evince something comparable to conscience. Because a corporation only acts through those who act for it, it is the latter who must assume moral responsibility for the corporation.

DeGeorge R. T., Business Ethics (New York, 1986)

Evidence at his 1990 trial showed that John Borowski ordered his employees to dump toxic wastes down a sewer. A judge sentenced Borowski to two years in jail and fined $ 400000. The President of metal-finisher, Borjohn Optical Technology, Inc. in Burlington: Massachusetts, U.S.A. thus became the first person ever convicted under the four year old `knowing endangerment' provision of the Clean Water Act. Smart, T., The Crackdown on Crime in the Suites, Business Week (April 22, 1991)

Thus, human beings/corporations' selfish-dictated motives seem to have a strong basis when one takes into consideration the following observation by a banking expert:

Overseas exporters in collaboration with Nigerian importers, prepare about three invoices for the same goods: inflated invoice for foreign exchange remittance; deflated invoice for customs duty purposes; and the actual invoice for the records of the importer. …

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