GPEP-R: Race and Foreign Direct Investment (Georgetown University, Mortara Center)
good afternoon everyone my name is kate mcnamara coming to you from the mortara center at georgetown university welcome to our seminar on race and foreign direct investment the seminar of course is part of our broader series we're running this year on race and the international political economy it is appropriate therefore that i would start by welcoming you all and acknowledging that georgetown university success today is the product and part of enslaved labor and the sale of enslaved people learn more about georgetown university's efforts to understand and address its role in the injustice and slavery at the link that will be in the chat so uh the series is really exploring the role of race in the field of international and comparative political economies something that certain folks had been working on for a very long time but unfortunately the majority of our field has not really grappled with this is part of a broader project called the global political economy project at georgetown which seeks to reimagine cpe and ipe and bring in dynamics and things like climate change digital technologies power dynamics and so on um to our study so we're absolutely thrilled today to have somebody whose work is i think um exploring in very creative and innovative ways elements of social identity and other factors that we generally have not really thought about when thinking through international political economy sono panja is joining us today she's an associate professor of politics at the university of virginia and her research examines the political economy of global production foreign direct investments and the links between globalization and social identity she's the author of a book trading spaces foreign direct investment regulation from cambridge and articles in in multiple journals she's also received a slew of awards i won't be able to have the time to discuss all of them but and she's been a fellow at the knee house center and at stanford so sonal is going to start by presenting for about 20-25 minutes i'll follow up with a few questions and then we'll open it to the audience to q a um note 2 that you're very welcome to ask questions using the q a function whenever you like during the during the talk um and we will do our very best to get to all the questions um as i'm moderating so so now welcome very much uh to gpebr and we're looking forward to your powerpoint presentation thanks so much kate for that nice introduction and thank you to you and abe for uh starting and expanding this conversation on race and ipe and inviting me to be a part of it so to start off i want to talk a little bit about what exactly foreign direct investment is uh as distinguished from other dimensions of global production fdi simply put is a global production within a single firm so if you imagine a company that makes machines they need parts for those machines so in fdi they might make the parts in one country ship them those parts to another country in order to make machines by contrast other forms of what i'm going to call arms length global production are between different firms so the the company that's making machines they'd buy those parts from a company in a different country so why does that distinction matter well as you can imagine fdi is a complicated and expensive proposition so it's really only done by the world's most productive firms and they only do it when they're producing things that involve really advanced technologies and they want to maintain control over those technologies which is why they go to the effort of expanding the firm itself across multiple countries so that distinction is important to understanding what kind of effects fdi has on the countries that get it so i'm going to focus on two effects of fdi that i think generate a number of observable implications for racial disparity so the first and the most obvious is that fdi has economic effects on countries that get it in particular fdi tends to increase demand for labor so wages go up and this is particularly so for skilled workers and that's an artifact of that advanced technology that the multinational firms are bringing advanced technologies tend to require more skilled labor the second effect that i'm going to highlight has to do with the power and influence that multinational corporations have over the governments uh of in the countries where they invest uh to put it very simply lots of countries really want fdi and they'll go to great lengths to try to get it it gives these companies leverage uh we've thought a lot about ways in which that leverage is bad and and it is bad in many ways uh i'm going to talk about some ways in which it could actually be good uh as uh concerns uh racial disparities social disparities in the host countries so the first set of mechanisms or sort of relationships that i think come about with fdi with respect to racial uh equity has to do with existing disparities and economic opportunities in countries so to the extent that countries have racial disparities and access to education fdi is going to magnify the income inequality across races and that again operates through its effects on skilled wages um and uh we could think about and i'll talk a little bit at the end about different strategies that countries could use to try to combat that but just all those equal this could be bad for racial equality because of the higher premium on skills there's a second way in which it could magnify economic opportunity disparities and that has to do with access to capital so why is it that countries are so fixated or why are they so eager to attract investment well the hope is that fdi is this catalyst for economic development it creates these new jobs it introduces these new technologies the jury is out as to whether it's a silver bullet it probably isn't but we have a lot of evidence that under the right conditions fdi can very much be this kind of catalyst and probably the most powerful and the most unique way in which fdi contribute to economic development is that it introduces those advanced technologies to countries um and so we talk a lot about technology spillovers in that context so that would be you have a multinational company local workers get jobs there um they learn things that they can then use um to go start their own companies maybe even supplying to the multinational and in order for that kind of mechanism to really take hold people need access to capital to the extent that you have racial disparities and access to capital fdi may contribute to further disparities in entrepreneurship and innovation a second set of mechanisms through which fdi could contribute to racial disparities has to do with multinational firms as a conduit for inequality norms and practices one proposition is that these companies actually discriminate less than their local counterparts many of them are coming from countries that have um strict laws about employment discrimination and those tend to be embedded into the practices of the company when a company goes overseas it takes those practices with them and so um just in how the company operates they might be less likely to discriminate or there may be mechanisms in place that prevent discrimination second local racial categories just may not mean anything to foreigners so i've done some work looking at fdi and past disparities in india cast is a really salient category in india but if you're not indian it doesn't really mean all that much so they may just lack the biases that contribute to these kinds of disparities and to be clear none of this relies on multinationals being benevolent for being good citizens this is pure business for them uh in fact they might find it strategic to tap into groups that are underutilized currently if local firms are discriminating against certain races certain social groups but those groups possess the skills the talents that they need multinationals might be might make a strategic choice to go after them and really provide many more opportunities and as respects the in respect to the discrimination that you might find in local firms to the extent that multinational firms are raising wages they're increasing competition for those local companies it becomes more expensive for them to discriminate they can't afford to do it as easily so what does that all amount to well i think multinational companies can be a really powerful conduit for equality norms and a lot of research shows that efforts to expand economic opportunities to address social disparities in and of themselves don't work because there might be really prevalent norms that sort of restrict people's access to these formal opportunities or they might incur backlash if they take them so these norms coming from the multinationals are really quite powerful they're robust and we think that those norms could spill over into other parts of people's lives there's a long history of research and political science that shows how labor force participation can facilitate political participation particularly in the case of multinational companies in developing countries they tend to always equal have production practices that are more decentralized that are more collaborative that they give people voice give them practice and exercising voice and initiative and those skills can pretty directly translate into other parts of their lives in fact there's research that shows that exposure to those sorts of norms in the workplace um translates into different dynamics within households fdi is notable because it combines these norms with those income effects right if the multinationals are more likely to hire people from marginalized groups and they equip them and expose them to norms that empower them um we think that that's going to be a more robust uh source of empowerment that's going to be enduring and so to the extent that there might be backlash that there there are uh sort of the dominant group doesn't like the fact that uh the marginalized group has access to more opportunities they might be better equipped to respond to that the really interesting thing here has to do with governments and their incentives to promote racial equality so often strategies that we have to promote equality of difference of different marginalized groups rely really heavily on governments making a genuine commitment of resources and effort um behind these initiatives but it might be the case that uh people in government are disproportionately from the dominant group and really have a vested interest in maintaining the status quo what's interesting with fdi is that fdi aligns governments to send incentives with greater equality even if the governments themselves are kind of indifferent or even a little hostile to it um because of the potential economic benefits of fdi um the these equality norms kind of piggyback on them and can take hold without governments having to really make as proactive an effort um to initiate it so i'll talk about the role that they can play uh in sustaining it at the end i don't want to be pollyanna about this um i i think these multinationals could abuse this leverage um there's some evidence for example in the united states from uh employment discrimination lawsuits that employees file against affiliates of multinational firms alleging that there's employment discrimination by national origin so the very top of the firm's management business might be conducted in the home country language which leaves amer the american workers at a disadvantage um i think there's some interesting research to be done on that um there's there's a legal argument that um certain types of economic agreements relatively sort of benign economic agreements things in the u.s we have these things called friendship commerce and navigation treaties that that those agreements actually um exempt these affiliates from domestic and fair employment laws so not exactly racial equality but you could imagine other ways in which multinationals might uh end up having uh negative consequences um for equality and and i think that's probably an area that that could be very fruitfully explored the third set of mechanisms has to do with the costs of fdi promotion strategies in the past 20 25 years countries especially developing countries but countries pretty much across the board have gone to great lengths to try to attract fdi um um there's been a little bit of uh of a pushback against that more recently they're not doing it quite as much as they used to but nonetheless uh there's a lot of interest in attracting fdi and this taps into what is often described as a caricature of a race to the bottom that's not exactly happening um but you do see some leverage that these firms have as a consequence of their ability to kind pick up and move to go to go elsewhere and so these strategies i think could have a set uh could have could magnify existing racial disparities in representation and then access to government resources so for example a very common strategy that states and local governments in the us use to attract investment is to give them tax breaks so for example they might give them tax breaks with respect to local property taxes but in the united states local property taxes are really central to financing education and so you have education groups teachers unions particularly upset about these tax breaks for companies um because it ends up having these these consequences for public spending there are a number of ways in which competition for fdi could have negative consequences for regulation many bilateral investment treaties preferential trade agreements have investor state dispute settlement mechanisms built into them basically like third-party arbitration in case of any disputes between foreign companies and the local government there are a number of really hair-raising cases of multinational companies trying to use these treaties to prevent countries from enacting really basic regulations for public safety and public health those haven't always been successful but certainly the potential exists for these treaties to be abused in ways that constrain governments from regulating independent of these treaties uh governments may be loathed to really strictly enforce safety regulations environmental regulations um vis-a-vis these foreign firms because they want to keep them happy you could imagine to the extent that the harm that comes from that lacks enforcement i think things like you know pollution safety requirements could disproportionately hurt certain groups finally uh you could have there are many examples particularly from the domain of extractive fdi like fdi and natural resources where people are displaced from their land or for or from their property in order to give it to a multinational company they're also examples of of farmers land being taken away so that a manufacturing firm can build a plant and so to the extent that certain groups are marginalized have fewer rights they're probably at a greater risk of having this happen to them uh and so i think there's a lot of work to be done uh on all of these dimensions and thinking about where racial disparities intersect with the costs that that countries are willing to bear to keep multinational companies happy so where do we go from here so i think we probably need to think more about different types of identities the intersections of identities um and how those produce distinct combinations of costs and benefits from fdi um in particular i think the for example women racial minorities might be particularly um particularly uh um notable beneficiaries of the norms that the multinationals are introducing and the experience that they would get in working in multinational companies the second big step would be to think about how to connect these effects of fdi to broader strategies to for racial equality so if you recall the discussion of human capital and skills ideally you would have fdi coming in alongside long-standing policies to expand representation in higher education in certain types of occupations and skill sets and that the combination of those things could be particularly powerful and the last thing i'll note is sort of a challenge and that has to do with measurement to the extent that marginalized groups are marginalized well we may not be able to measure salient characteristics of their experience so for example firm level surveys or firm level data may not record information about workers race um so i think we're going to need to be more creative about finding ways of ensuring that we're accurately measuring disparities and such that we can can accurately assess the consequences of things like fdi for issues of racial equality and with that i am very much looking forward to your questions great thank you so much and i will ask folks again to please go ahead and use the q a function um and look forward to your questions and i will get us started so thank you so much for that i mean i have a lot of thoughts but one let me start um with this uh you know one thing that's so striking to me about um sort of the study of international political economy is how you know sort of little work there has been in terms of kind of you know the the center pieces of how we we teach and and think about ipe in fdi you know you were such a great kind of you know new generation coming back to you know gilpin talked about firms right but then we stopped talking about that and it strikes me that one of the really big problems with that is of course you know your kind of short overview really sort of helps us think about how markets are structured by and structure right norms and identity and inequality in really kind of profound ways but we haven't necessarily sort of you know teased that out effectively i think in ipe and i think you know fdi by making us focus on firms right as the kind of agents in markets of markets it grounds it much more in terms of you know what does this mean for people living under a globalized world right and so i so i think that's wonderful and i thank you for that but what i wanted to ask you was you know sort of in your mind how different is kind of fdi as a market phenomena as something that pushes forward politics and and kind of social changes and transformation from things like trade or financial flows like how should we kind of be we be thinking about things that are different about fdi um that matter for the outcomes that we care about sure sure so your point's definitely well taken about why uh that it's this oversight that not having greater attention to these kinds of issues in ide and and what's what's what i think is particularly notable about that is in my mind ipe is kind of set up to do this right at the end of the day we're interested in who the winners and losers are and uh it's just a matter of shifting our focus a tad bit to who those winners and losers are um and just digging into it with a little bit more nuance um so to your question about how to contrast fdi to these other aspects of economic integration so we could compare them side by side pretty readily in the very standard factor returns sense that we have in ipe of you know what's happening to man for labor what's happening to capital um but as you're noting the fact that it's these firms in the case of fdi who are the agents uh of this just adds so much more richness to what can happen um because you know they're introducing these norms and because um they're so powerful like you know gilpin back in the day had recognized how powerful they were as actors in the international system that that um that they become political actors in their own right um so that's on top of all of the kinds of distributive consequences um so uh i'm i'm a little bit biased but but i think there's a lot of of grounds uh a lot of material to work with with fbi definitely i completely agree and so i hope you know i hope sort of generations are now kind of tackling this because it seems to me that you know we have this sort of focus on openness or closure at the international system and then kind of individual preferences and voters right and we miss that whole huge kind of chunk in between and you know obviously trade is important because it changes sort of consumption habits and and so on and so forth but fdi and and global firms are so uh deeply kind of intrusive in the economies that they're uh that they're involved in uh and you know you capture that beautifully in in your comments okay let me let me take another swing at something which is you know as you were talking i was kind of thinking about you know what is it about firms today and the way supply chains the kind of complexity of supply chains in the kind of digital era that make things different or not right from the east india trading company right or you know fdi has been going on ever since right um and so can you talk a little bit about you know ways things that might be the same things that might be different kind of i know your work is is sort of more modern right but you know how how would you kind of think about the changes that are happening today in terms of the complexity of production and supply chains so um i may not go as far back as the the east india companies but i think probably uh in the past few decades the big shift has been in vertically integrated supply chains so it used to be the case say you know roughly speaking earlier than 1970 that you had fdi but it was dominated by natural resource extraction um and it was a substitute for trade it was a way to go and compete in markets that won't let you import things so you know you think of the classic import substitution industrialization right you want to sell to those people you have to go set up shop but start starting in the 1970s and then really taking off the 1990s you have a different way of organizing production that many mostly manufacturing firms are pursuing which is these vertically integrated supply chains where my example at the beginning where you have the parts stayed in one country and then you assemble the machine another you know imagine that on a really large scale um and so and certainly technology enabled that right you wouldn't have been able to handle the the complexity of those sorts of supply chains without advances in information technology um but but that shift also really kind of radically changed the relationship between multinational companies and governments because before uh governments had a lot more leverage hey you want to come sell cars in indonesia or in argentina ford well you know you have to play ball with us um if you want to come get our oil you know you have to be nice to us but where you have these vertically integrated uh supply chains companies have much more flexibility in where to go right it's not that it's the countries that have really big markets or have natural resources that are going to be attractive you can countries can actively compete to get investment right make by offering you know lower labor costs you know all kinds of subsidies and so so i think with that you have this profound shift in that dynamic to the one that that i was describing thank you yes and my my partner in crime abe newman had a question in the chat about exactly this that you know the previously we think of fdi's being really based on extractive industries and so current patterns in fdi you know uh how do those different it sounds like you it sounds like to some degree of course there's sort of less latitude when it's not about you have this extraordinary comparative advantage of some sort of natural endowment of tin or bauxite or whatever it is right um where there's more room for maneuver in uh in a world where it's not about the kind of extractive uh stuff but it's these complex supply chains um okay let me go to actually a few of our questions already um from cleo brian udri she says do you see any differences in the effectiveness of fdi in advancing employment norms for the obc sc in india between companies with large number of indian immigrants one could imagine companies whose members may be more resistant to altering these norms having different effects on the ground uh that's a great question it's a question that has occurred to me uh i do not have an answer for it um but certainly it would be the implication of the argument that that um i make in some of my work right that if if if it's driven by the fact that these foreigners just don't care about the racial categories oh that are in the local economy well if if in fact they do if in fact they have the biases that exist in the in the local economy it may uh you know you may not see that effect and certainly i think there's anecdotal evidence of the reverse happening that you have like in the silicon valley um people who are who whose ancestry is in one cast you know discriminating against a worker whose you know ancestry is from another past but you know they're all in like curtino california um so i think i think that's i think it's certainly possible again uh if i had the data uh i it's something that i would i would definitely want to test i guess that does to sort of follow up on that you know you've given us this wonderful kind of big overview analytic thing but i was wondering if you wanted to kind of talk at all maybe some more kind of color commentary about some examples of you know how these things are playing out um like for example the exam examples of um kind of align aligning of government uh governments with sort of um corporate standards of equality um can you kind of talk about cases maybe that for that or for some of these other um dynamics that you've been working on yourself and have some familiarity with to give us a little bit of a context sure sure so you know i've done i've done a lot of work looking at gender in india uh with respect to fdi and there's a country where you have uh i think it being understatement to say that there are restrictive gender norms right there it's there are um really really sort of regressive gender norms that are still quite prevalent today um and politicians uh haven't been you know terribly motivated to to really truly do something about it so um so for example i in some of my work i look at the consequences of fdi again on violence against women and so you have uh politicians from saying yeah well you know the women they were asking for it like yeah it's gonna happen like they're not they're not really all that motivated to address it and again not not surprising right these are the folks who who are the beneficiaries of the status quo what reason do they have to really try to alter that um but what's what's unique about fdi i think is that uh they really want it they really want those economic benefits and so if if greater equality is what they have to suck up in exchange for it right okay you know fine um but so sort of almost in spite of themselves they are promoting greater equality by bringing these companies in um and and i am i'm uneasy a little bit about emphasizing that because it makes me uneasy to have to rely on multinational companies to be the big agents of social change because they're just not reliable enough and their incentives are not sort of firmly aligned with the quality enough that that i'd be ready to say you know okay let's you know it's all about fdi um and you know i've looked a little bit at other sources of external pressure for gender equality like you know international um sort of ngos or um international agreements that enshrine certain rights for women and so you know those can be effective but ultimately they require um governments to do something right governments have to enforce laws they have to enact laws um and whereas in the case of fti you have more of a grassroots empowerment um and so ultimately the government still have to do stuff but um you have a much more robust source of pressure um on governments to to enact these sorts of policies and hopefully one that can be sustained excellent yeah we're getting a lot of questions now and actually folks are putting questions in the chat just to keep me uh on on board here uh no need to repeat them if you have them in the chat as well uh already but going forward if you could put them in the q a that'd be awesome i always feel like i'm riding a unicycle and juggling and you know doing webinars is like ah you know all this stuff but i can imagine yeah um but lots of people picking up on this you know interesting question about sir what's rational for a firm right firms are utility maximizers they want to you know they're driven by profits and how we may not have a kind of universal standardized kind of law of what that means in terms of equality issues right and discrimination it's going to depend right on the circumstance they're in on you know there are sort of questions about um uh i think uh amazour was saying you know actually you know maybe racial inequality is going to be worsened if in fact you favor the dominant group because they're more skilled which was i think one of the points you were making um jp singh was sort of you know probing this question of sort of you know what is what is utility maximization um uh in these in these situations um but we also had a question about the impact of multinationals um differing across developing countries and developed countries uh or you know in your mind do you kind of think about these things as similar across the board um so i think some of the mechanisms that i described are going to be more prominent in developing countries as opposed to developed ones um so certainly the issue of norms being transmitted uh i think that's gonna be much more salient in countries that um have weaker norms than the the home countries of the multinationals um but certainly the what i was talking about at the end in terms of the the costs of of trying to attract fdi and who bears those costs i think i think you very much see those in in advanced countries like the like i was talking about public education and and uh tax cuts property tax uh breaks for for foreign companies you know that's that happens like in our neighborhoods that's a very very local phenomenon okay we have uh virginia hoffler was asking about she said very interesting presentation thank you one question i have a distinction between talking about fdi in general versus mncs as organizations with variation in their norms policies and leadership both are important but i wonder if you have any thoughts and of course you know we were very unfair by telling you to tell us everything about these things in 20 odd minutes so you didn't get to the variation but you know wondering how you would ha obviously jenny hoffler somebody's thought a lot about many of these issues how you would how you'd respond to that um so if i understand the questions or what how do we unpack the idea of a multinational company think about sources of variation um yeah exactly i think sort of fdi as a sort of you know here's this kind of global globalized force of things going on in markets and then mncs has organizations right and i think this sort of start this is where i sort of started out my comments of you know i use this expression agent's agents of of the market right how do we kind of think about those those things together absolutely so so in doing this work i've discovered this vast literature of people who work in organizational behavior people who are based at business schools who study the culture of companies who study in in just my new details so i think uh there there's a lot of material for us to work with um certainly uh you know country of origin of the multinational is probably going to matter a lot because uh the the norms the practices are going to very are going to reflect those of the home country where they originated because that's where those practices and those were the laws that they were responding to and even in some cases um there's oversight like i have gone and done interviews uh with executives and multinationals and they described that the at the headquarters they are very attentive to metrics of diversity that they use in the home country and they apply those same metrics uh to subsidiaries uh and so so they're under scrutiny on these issues in a way that their local counterparts aren't um so so i think that would probably be the first place to start to to look at some heterogeneity i think there are lots of other you know there's going to be interesting variation by industry um so certain types of industries are probably going to lend themselves to different organizational forms so in some of the work i've read um where uh multinationals tend to be more decentralized collaborative in their decision-making processes um in the of average developing country it's a much more rigid hierarchical organizational culture and so you could think about if you bring in what that means for the propensity to bring in people from marginal marginalized groups and what their experience is of working in those places and so some of what i was talking about in terms of the skills people acquire in the workplace and how that translates into political participation it's probably the case where you know people are asking you your opinion you're given more responsibility and authority that that's going to to have um a much greater benefit in other parts of their lives one of the um things that really helped me understand that um really deeply was i think about even 10 years ago now catherine boo's article in the new yorker which then developed into uh her book which has a beautiful title i forget what it's called something about the setting sun or under the anyhow catherine boo b-o-o and she writes about you she's sort of embedded in do you remember where like mumbai or some place darby it's one of the biggest slums and so you know so do you know what i'm talking about right so this piece for me as somebody who knows literally nothing about any of this you know really gave me a sense for the transformative effects of these of employment in these particular um i guess these were you know sort of offshored things uh that were you know in the kind of western capitalist corporate model but were you know hiring locals who i mean it was mind-blowing to me this is you know an example of this sort of beautiful narrative non-fiction that really can kind of give you the flavor of these things i know did you want to mention anything about that that so sir so you know the example that comes to mind is uh about four years ago i went to the city of hyderabad in india i'd never been there before um and i went to give a lecture at the indian school of business and the school is located in adjacent big tech companies i think the microsoft campus is next door and if you didn't know know better you would think you were in the middle of california because you know the infrastructure is pristine everything's clean everything works you know you see tracked homes kind of like you see in california um and and i think that kind of speaks to the same phenomenon of wow you know culturally this is just this sort of dropped right into the middle of the country um and you know that that probably has far-reaching consequences for the people upon whom it's dropped right and i remember i think you know the main kind of character you know he goes back at home at night to his home which you know doesn't have running water and has you know like this horrendous you know corruption all around and this and that and the kind of disjuncture between that lived experience of being in that sort of american corporate environment and then back home again which leads me maybe to another question nina obermeyer asks about the question of backlash against norms of inequality right that you know when these pressures come from an international source we know there's more likely to be a sort of you know backlash that could be generated right with that you know company being plopped down with the beautiful pristine everything um and so you know is that something that you see also occurring um a sort of greater likelihood maybe of of you know political backlash and renationalization and you know populism etc so there's certainly backlash all those efforts to attract uh for investment that i was talking about uh justifiably you know the people who are angry about it and they're pushing back you know farmers who are evicted from their land they're protesting um uh and you know every every right to uh and so you do see uh sort of a sort of a re-evaluation of what it is countries want to do to attract investment so for a while you know countries were signing these bilateral investment treaties left and right and you know tying their hands in all sorts of ways and in the past few years they've said whoa whoa wait a minute this is not what we signed up for and you know they some countries have suspended their bids but you know they've stopped signing them um so i think that's and that's probably a a healthy re-evaluation in a lot of cases it's not clear or it is increasingly clear that uh that these measures often don't work in attracting investment um and all they do is transfer wealth from countries to to you know multinational corporations um and so and so i would think about that and then i would think about backlash in the different sense of of thinking about social dynamics if you have the multinationals of empowering marginalized groups you could you could see backlash against that that you know from the dominant group and so so this work i've done on gender really focuses on that dynamic and so the idea is that um with multinationals they're not that's probably not going to stop them from doing what they're doing um whereas you could imagine other strategies for empowering providing you know economic opportunities for marginalized groups that if there's some backlash then you know maybe maybe those opportunities start to recede or they back off a little bit but multinationals don't don't really care if you know the dominant group doesn't like the fact that the marginalized group is being helped so the hope the the ideal scenario is that they can be this lasting force for equality because they stick around they're big they're important um but but that's very much the ideal scenario right i mean it really gets to this kind of you know huge big question around um you know how how can capitalism be harnessed for the greater good how can it be you know structured and tamed in ways that actually do promote social stability and inequality and i believe that can happen right and we've seen that that happens in it usually involves a heck of a lot of government regulation and in these countries where you know that's not something that that is uh forthcoming that's very problematic but i know there's a lot of research out there being done uh i believe debbie avant at university of denver has been working on mining companies in latin america and she's actually been with her collaborators been finding kind of examples of mining companies that are working in quite a collaborative way with the indigenous communities that they are situated within you know presumably because in the long term that actually is good economic sense right so some of this is about sort of the time horizons around around the various economic actors but um susan cosa does ask us to consider um you know firms you're emphasizing firms are interested only in business profit are there ways to significantly influence firm behaviors other than through strictly economic incentives corporate social responsibility what do you think about all of that uh i i guess corporate social responsibility is in the eye of the beholder um uh you know i think in the most uh charitable least cynical formulation of it yeah they really do care about the well-being of the communities where they're operating and and it it it makes both good moral sense and good business sense to make sure people have good schools and running water and things like that um so i don't know that there's a way to really there's strategies other than laws other than requiring it that could consistently harness or inspire more companies to engage in those sorts of activities um yeah yeah no i tend to agree it's interesting every year i have i teach a policy class in the school foreign service for the master's students and i inevitably have one student who always writes a paper about corporate sexual responsibility because you know it's something that we would like to figure out how to how to make work and uh it's you know often sort of at the margins can be effective but yeah usually not not that much um all right uh we will kind of do a last round of questions so please go ahead and ask your questions in the q a and jp jp jumped right on that so he said okay another one the racialization and racism in fdi might be in the global value change critical theory notes that fdi fdi aka neoliberalism promotes international division of labor with a racialized racist dimension is sonal arguing against that uh no uh i think if we were to take a more expansive view of global production and global supply chains it would encompass not only fdi but all of the kinds of arms-length transactions that i was describing at the beginning and and you know in their in many instances it makes sense to think about all of these things together because they are the same multinational company might be engaging in fbi in one place but in arm's length transactions and others and so uh is there an element of exploitation in that division of labor um you know it's this is a question my students will often ask or i'll pose to them in a very provocative way um and i think certainly as you go down the value chain so you're going to the activities that involve less and less skilled labor um i think exploitation is very real and i think uh globalization is uh in particular just sort of the volatility of demand um you know sort of the lots of uncertainty that it creates um it is marginalized groups who are going to bear the brunt of that um so it's hard to escape that yeah and it really you know i it's interesting because i i i saw you uh much more arguing sort of on the one hand on the other hand you know in the sense of look this this exacerbates racial disparities fdi exacerbates racial disparities you know because it drives up you know the premium for skilled labor et cetera et cetera but it does have the potential maybe right under certain conditions to actually promote new norms of racial equality uh and and norms around equality of i you know intersectionally gender etc um and so i i see is that was that right that you're sort of you know on the one hand on the other hand it's not a you know complete and utter kind of condemnation of the role of global capitalism right uh yeah yeah i it's it's uh it's much more wishy-washy well i think it's sort of it depends and we need to look and see and it's an empirical question although jp is of course very very correct you know anything you know hyper global capitalism right is going to bring with it all of the problems of of of capitalism that we know right um and so you know again to me that speaks to why we need to study this much more closely we need to look directly at firms we need to you know look at supply chains and so on um okay um and jv says thank you uh i like the balance wishy-washy view i agree so yay good um okay um one of our wonderful predocs in g-pep sally asks about the importance of technology to fdi which we did touch on but she wants to push you a little bit further how important is technology to mnc leverage and bargaining power in the host country does this also allow them to engage with host governments and change government preferences towards racial inequality etc more effectively and given ciao's interests i think she's really talking about sort of global platform companies and maybe back to silicon valley as well so how might we be thinking about the tech piece yeah so i guess i was thinking about technology very much as um the source of great productivity um and uh what's what's distinctive about fdi is that these technologies that the firms are bringing in there aren't really many other ways for countries to get access to them um and so that's that's part of the reason why fdi occupies this particular place in in the imagination of economic development um but certainly if you're thinking about like you know amazon or or you know something like that coming into a country that that's that's technology and um and that in terms of the economic consequences gets much more complicated and really interesting ways because their you're potentially putting out of business lots of other kinds of retailers lots of smaller retailers so i know in india retail fdi and including sort of online retailers the single most controversial issue in fbi by far they debate it all the time and this is so unfair but i'm going to ask you have you sort of worked on thought about china in all of this i mean you know when we talk about the technology and the sort of you know clash of the global tech companies and uh national um corporations and national policies and so on that's of course what immediately comes to mind but you know is china sort of in a different category from all these conversations that we're having and you know you know i think a lot of your work obviously is looking in india and other places like that i mean how do we how should we think about china in this whole conversation so you can't not think about china um china's always the elephant in the room and i think what's interesting with respect to technology and fbi in china is that in china there's still requirements that foreign firms enter uh via joint ventures with local firms and that is very much a strategy to try to force those technology spillovers um i wrote a whole book that argues this um and so and so those still exist and it used to be the case that those kinds of policies were much more common um most countries have dismantled them right china can get away with it china is you know just so big and so important um that uh particularly with respect to producing to meet local demand that companies are still gonna go um despite having to share these technologies um the the kind of stylized fact about those arrangements is that the foreign companies may not be bringing their best technology because they're being forced to share it so you could imagine that there's a welfare consequence for china um as compared to if they were allowing these companies to come in as wholly owned foreign entities um great excellent all right thank you so much for thank you so much for that um that and you know i really appreciate you sort of helping us uh start to kind of think through some of these issues um really really appreciate you taking taking the time to be with us today um like to tell everybody that a recording of the event will be uh up uh on our website um i think that will probably be in the chat the link for that um we have a youtube channel now and um also to tell you that the next talk in the series is going to be march 11th at noon we're going to have two panelists dr olivia ruta zibwa and nazine barma talk about race and international development so continuing some of the early conversations we had about foreign aid um so the rsvp will also be um on the g pep website and i think in the in the uh zoom chat um so thanks everyone for coming today um thank you sonal uh what a pleasure it's been and um for my colleague abe newman and um everybody at the mortar center and at georgetown hope everybody has a great day and we'll see you at our next event thanks so much kate you're welcome
2021-02-27 08:42
