Multinationals in Kenya and the Pacific

This scholarly work musters empirical data to demonstrate that multinational corporations thwart egalitarian development in the Third World. Langdon studies Kenya from 1967 to 1973, a period when multinational investment was on the rise and the newly-independent Kenyan government followed a laissez-faire policy toward international investment.

While the subsidiaries of multinational corporations gained "extensive market power" in Kenya, they enriched only a small minority of Kenyans, mostly the "insiders" who controlled the new African government for their own enrichment, says Langdon. The multinationals, unhampered by government restrictions, "damaged the enterprises of a range of indigenous entrepreneurs, promoted a highly protected style of industrialization that. . . turned terms of trade against the rural majority, and helped perpetuate a restrictive and unequal structure of political economy that was biased against the poor." In short, Langdon asserts that the multinational-directed development plan increased poverty, unemployment, and class inequality.

The bulk of the book is an analysis of the role of multinationals in Kenya's economy, based on interviews with 81 multinational subsidiaries and 60 local enterprises. Special attention is paid to two industries (soap and shoes) in order to compare the impact of local and multinational operations. Langdon finds that multinational firms dominate the market and undercut local competition through a "taste transfer" process:

Through advertising, multinationals transform a basic need into a demand for a brand-name consumer product. For example, Langdon cites U.S. beverage companies as "redefining the basic need for drink into demand for Coke or Pepsi."

By allowing foreign companies to dominate the soap and shoe industries, argues Langdon Kenya forfeited the benefits of local industry: higher employment, savings on foreign exchange, better product distribution, and more linkages and expansion for local industries.

"A marked reduction in the mnc (multinational corporate) role is essential to an egalitarian strategy" for Third World development, Langdon concludes. A further policy implication is the "encouragement of. . , simpler smaller-scale local alternatives" to foreign directed enterprises. To be effective, however, this approach requires "transformation of power within many poorer countries" Langdon warns; without such changes, any increase in Kenya's bargaining power with multinationals "may only result in more rewards for insider bourgeoisie's," not for the poor.

Langdon's work, though rather thick with academic jargon and economic equations, possesses the great virtue of providing empirical data to support arguments about the deficiencies of the mmultinational approach to development.

- Rose Marie Audette

This study, sponsored by the Pacific Conference of Churches' Church and Society Programme, reflects increasing church involvement in the issues of social justice. It is meant as a manual for Pacific church members and leaders, to guide their critical questioning of multinationals and their role in the Pacific economy. Winkler outlines a conceptual framework for understanding multinationals, followed by a review of foreign investment and multinational presence in the South Pacific.

The South Pacific suffers from large-scale penetration by foreign capital, Winkler argues. The economies of the Pacific islands revolve around fishing, forestry, tourism, or other crops. "One or a very few transnational corporations totally dominate these industries in various Pacific Island countries," says Winkler.

The price of this dependency is high, Winkler warns. In addition to the economy's consequent "vulnerability to imported inflation and fluctuating commodity price," there are "alarming social implications" stemming from foreign capital's presence: "those who were previously not considered poor are rapidly finding themselves redefined by higher prices, continuing low wages, rapid inflation, pollution, depletion of nonrenewable resources, (and) economic depression."

Winkler calls upon the church to speak with a "prophetic voice" on the issue of the role of foreign capital, and urges the church to "cast its lot with the poor." Says Winkler: "The desperate need is for new models of decision-making and accountability where human values and social goals rather than economic indicators are the points of reference."

Losing Control's value is not limited to the church or the Pacific. This study condenses the issues involved in multinational expansion, and highlights the problems facing Third World countries in the current economic crisis.

- Rose Marie Audette