From Poverty to Power Green, Oxfam 2008 - weman

FROM POVERTY TO POWERWhile China’s growing investment in Africa is best known in theextractive industries, where it has been portrayed as leading a new‘scramble for Africa’, in fact Chinese firms are taking on a significantnumber of construction and infrastructure projects that have beenavoided as too risky by European or US firms. In Sierra Leone in 2005,within two years of the end of a bloody civil war, China was alreadyinvesting $270m in hotel construction and tourism. 146Southern-based companies have good experience in producingand marketing low-cost products, giving them an advantage in accessinglow-income consumer markets. Chinese electronics companies suchas TCL make $50 colour television sets in India and Viet Nam. 147When India’s Tata Motors launched its ‘people’s car’ in 2008 itfollowed in the footsteps of the Volkswagen Beetle or the Model T Ford,promising to bring cars to new generations of consumers by exporting$2,500-Nanos to the rest of the developing world. 148 DevelopingcountryTNCs are more likely to use ‘intermediate’ technologies thatare more labour-intensive, and so create more jobs. 149 However, thepoor performance of Southern TNCs regarding social and environmentalresponsibility is a cause for concern, and may be due to theabsence of strong government or civil society scrutiny at home.Developing-country governments face dilemmas in balancingsupport for FDI and for home-grown firms. If foreign investmentwere identical to the domestic variety in its economic, social, andenvironmental impacts, there would be no reason for governments toprefer one over the other, but in fact they behave very differently. Eachhas its merits. Domestic investors are ‘stickier’: less likely to leave thecountry, they reinvest more of their profits, and are more likely to keeptheir higher-value activities, such as R&D and design, at home. Thismeans that there may be developmental reasons for preferring domesticinvestment, even when a foreign investor’s record on corporateresponsibility is excellent. For their part, foreign companies cancontribute cutting-edge technology, jobs, and tax revenue to a pooreconomy. They have better access to international markets andsources of credit, often have a better record on wages, labour rights,and the environment, and can influence how domestic companiesoperate. 150174