TNCs: aid agents for the new millennium?
Karen T. Fisher and Peter B. Urich
Until very recently private capital flows to developing countries have been growing rapidly. In the wake of the 1997 East Asian financial crisis, foreign direct investment has been identified as a vital ingredient to restore and invigorate the economies in the Asian region and beyond. In an attempt to attract overseas capital and to stimulate economic development, countries such as the Philippines have stepped up the adoption of policies that allow for greater access by foreign investors. Increasingly, it appears that foreign capital, provided through transnational corporations, is set to replace official aid and to promote economic development first and foremost, with ‘trickle-down’ social benefits to follow. This study examines the role of one transnational corporation called the Alliance, in the promised development of Bohol in the Philippines, as a by-product of a water treatment and supply proposal linking the island provinces of Bohol and Cebu. The findings suggest that economic objectives tend to take priority over social development. The Alliance seemed to expound its economic and technical ability, with less effort given to involving and consulting with affected communities. This resulted in residents being disenfranchised from the development process, and gave rise to a feeling of mistrust and resentment.
It is estimated that private capital flows to developing countries quadrupled during the 1990s
( UNCTAD 1999 ). Of these capital flows, foreign direct investment (FDI) to developing
countries has been experiencing significant growth: around 40 per cent from 1990 to 1993, 17 per cent in 1994, and 13 per cent in 1995 ( Rollasen 1996). However, FDI flows are unevenly distributed over different groups of developing countries, with over 75 per cent directed to only 12 countries, and the regions of