From: "Salil Tripathi" <salil61-AT-hotmail.com>
Subject: Re: Corporations and societies
Date: Sun, 21 Oct 2001 07:44:32 +0000


Dear Margaret,

I'm genuinely puzzled by the source of your statistics. You claim that "Rice 
is currently one of India's most important export products." According to 
the government statistics, *all cereals* account for only 4% of India's 
exports. Manufactured goods account for 73%, for example. Please see this 
http://www.indiaonestop.com/compofexports.htm
Even if we assume that rice is an overwhelming component of this 4% figure, 
you are still talking of 2% of total exports. Now I agree that "major" is a 
relative term, but you can't call 2% of total exports as "major" or 
"largest", by any stretch.

That India is a major international rice exporter is, I believe, irrelevant. 
Anyone could be. The biggest exporters, in fact, are Vietnam and Thailand 
(and the US -- from Louisiana). And if you look at the work of Mercredita 
Sombilla at the International Rice Research Institute, it will show that 
rice is *not* a traded commodity; it is consumed where it is grown; and only 
a limited amount is exported; and that which is exported is often to 
neighbouring countries (notably Indonesia). China, too, is emerging as an 
exporter. So what's your source in saying that India is a major exporter?

Incidentally, I agree with much of what you say about rice, its caloric 
content, its lack of other nutritional values, and so on. I learnt a lot too 
from that part of your post; thanks. In fact, you will certainly find 
Sombilla's research interesting. She extrapolates incomes of countries, and 
makes the assumption that once countries advance economically, they buy more 
balanced foods -- her examples are Taiwan and Singapore, which, once they 
became more prosperous, began to consume other products, reducing dependence 
on rice. There was similar hope about Thailand and Indonesia's move away 
from rice. But the Asian economic crisis intervened, and the countries' per 
capita incomes declined. The result was that they were more dependent on 
rice, but the corrupt governments had already sold rice farmlands to 
developers of golf courses from Singapore and Malaysia, or built 
multipurpose condominium projects. Java lost rice land the equivalent of 
Brunei, in land area, each year. Sorry to digress on this; but I had written 
a long article about the politics of rice, and if you are interested, I cn 
send it to you backchannel, if I find it. It is old; it was written in 1998.

Incidentally, the point of the paragraphs which you've not wanted to respond 
was that multinationals are as heterogenous, not monolithic at all; and that 
they hardly invest in South Asia or in emerging economies. They pass by 
these countries, and the countries which invest in emerging economies are 
often newly-industrialized countries, not the Big Fortune 500 companies. 
That, I thought, was relevant to point out, because the thrust of your 
argument was about western MNCs in India.

You've given a detailed picture of India's malnutrition -- but what's the 
point? Why is it the fault of MNCs? Are you suggesting they are not 
investing enough in India? Or is it because they are investing too much? The 
latter is not factually true, and I don't think greater MNC investment in 
food-based industries is an issue here. One perennial problem with India is 
poor distribution and warehousing in food. Of course, I agree with you; 
overpopulation is not an issue here. But distribution of food already grown, 
is. And there, the blame lies with CWC (the Central Warehousing Corp, a 
state-run enterprise) which took over grain trade and stored food for 
emergencies, only to find rats consuming it -- human and animal variety. 
Corrupt government officials often diverted the food to open markets to line 
their pockets, and rodents did consume that food -- some 20%, in Madhya 
Pradesh, in mid-1980s. Do look at BG Verghese's work at the Centre of Policy 
Research in Delhi, particularly his critique of india's food distribution 
policy in 1987, when there was a drought in central india.

You have said most Indian people can't afford to eat McDonald's is true; but 
here is a private company, coming to india and investing, creating some 
jobs, in a v small way being socially responsible and helping teach some 
indians that caste barriers are bad...... surely that's not so trivial? and 
like i said before, nobody is forced to eat there; nor is anyone telling 
people not to eat samosas or idlis. if they do lose money, it will be the 
company's fault and loss. there's no responsibility the government or the 
people have to bear. what could be wrong with that?

whether it is mcdonald's, citibank, software companies, etc, whenver these 
are invoked, critics of MNCs in india tend to say: but that only covers a 
"relatively small privileged class" of the population. peons in citibank are 
well-paid, but they can hardly be called privileged classes, likewise with 
those who work as tellers or chauffeurs. to see these institutions and 
assume that they only benefit the tie-wearing IIM males is wrong. the 
institutions do provide more efficient services that do benefit many more. 
the IT industry is a genuine equal-opportunity provider, i've seen companies 
like tata and wipro hiring people irrespective of caste, religion, class, 
and so on. and collectively, these numbers add up. that might mean more in 
urban india, the fastest-growing part of india; but you are talking of 
10-15% of the population at the v least. (i daresay it is a bigger 
percentage than that). That's 150 million people, the size of many large 
countries. what's wrong if something is beneficial to 150 mn people? More 
important; why is it assumed that it is always at the cost of the rest of 
the society? public resources are NOT being diverted for these industries. 
it is the private sector which is bearing the risk and creating these 
services and industries.

Anti-trust laws do regulate activities only in the US, but a broken up US 
company cannot form a monopoly overseas, because local laws in most other 
countries are modeled on US laws against trusts. And as I said, most US 
companies invest in the developed world, not in the developing world. And 
some US laws are applied extraterritorially, eg price restriction agreements 
(there was a US-Canada dispute during Diefenbeker's time I recall), tying-in 
agreements, and most imp, the foreign corrupt practices act.

You've asked:

>
>The central issue between us is - have multinationals been of benefit to 
>the
>people of South Asia as a whole, or have they been detrimental to those
>people?

You seem to think not; my view is that they haven't been around 
significantly enough to have any major impact. There are areas where they 
have been hugely beneficial; and there are a few spectacular examples where 
they have not been -- Carbide being the obvious one. However, the problems 
of S Asia are huge, and it is wrong to say that MNCs are a major factor for 
the causes of the problems -- as you believe -- when they are not major 
players in the economy.

I will try and get an electronic copy of the IGIDR research on Indian 
economy from 1990-2000 and send that to you. I don't mind sharing it with 
the list, provided there is greater interest in the list on this issue.

And finally, to Bob: you are welcome to read any motive/ideological 
preconception in my posts. That's your reading, but it is wrong. My central 
problem with looking at history to explain causes is that it makes some 
responses appear as legitimate. It also allows India's Hindu fundamentalists 
to raze Babri Masjid and then kill Muslims, because in their view they are 
setting a historical wrong right.

As I said in my post yesterday, indeed imperialism was wrong, as was 
colonialism, but we have to move on; we can't constantly explain the 
failures of today by harping only on what happened in the past, nor can we 
think that every multinational today is as powerful as the East India 
Company. When they want to, third world countries are able to block 
legislations against their interests. India could stop the CTBT, being the 
sole naysayer; Bangladesh has won disputes at the WTO against the US; 
Thailand has won cases against the EU. Bill Gates is the most powerful man 
in Microsoft, but he is far less powerful than Mahathir Mohammed in Malaysia 
or Atal Behari Vajpayee in India, or any other leader for that matter. The 
third world leaders who claim that WTO is "imposing" something on them, or 
an MNC is "forcing" them to do certain things, are being disingenuous. As I 
said earlier, MNCs are driven by profits (nothing wrong with that in my 
book), they create jobs, bring new technologies, and they can goof up; just 
like any other organ of a similar kind. They are not particularly vile, nor 
are they charitable organizations. If they were as omnipotent and powerful, 
we wouldn't see so many bankruptcies, mergers, silly product launches, and 
so on. If they can't their own businesses efficiently, how could they be 
running the world?

Salil

Salil

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