The influence of transnational corporations on labor force migration

In the debates on the influence of transnationalization, savants and experts concluded long ago that this phenomenon is not purely economic, which is limited only to the reorganization of production activities and movement of capital flows. Globalization is a process of large-scale that produces effects in several areas such as politics, finances, trade, defense system, demography, ecology. Academics consider that the world has now become "a global city."

Transnationalization, in compared aspect, still can be viewed as migration process. Putting capital in other regions of the world, necessarily involves staff migration. Transnational corporations favors the meeting of the labor force with capital, making the movement of labor towards capital or transferring capital to areas with labor force surplus.

Usually, foreign direct investment is placed in the long term and requires interaction with various groups of econo0mic agents, starting with suppliers and ending with officials. Investors need to know the consumer, labor force and raw materials markets, regulations and laws governing their activities. Informational and contractual problems can often be very hard, so legal rules remain to be the most important determinant of FDI flows in one state.

The history of labor migration knows more than 100 years. Since the mid-nineteenth century were observed in many migration flows from European countries to the U.S., especially during economic conjuncture overseas. The second wave of migration into the U.S. from different countries was in the years '20-50, XX century, and then followed the migration from Mexico, the Caribbean etc.

Experts consider that the first attractive center for foreign labor force has been South Africa, which since the '50s drew cheap labor force from neighboring countries. In the period 1950-1970 takes place the accelerated development of peripheral global regions industrialization, which later achieved positive results in industrial development, becoming leaders in chapter - exports. They relate to Latin America, South African, Middle East and Southeast Asia. Obtaining independence of many African countries boost this process. Active penetration of international corporations in South Africa from Europe and the U.S. in the '70s, led to increased migration of labor force in this area. During this time it began to form the international center of attracting labor force from another continent, in South America, in the composition of some of the more developed countries like Argentina, Brazil, Mexico and Venezuela. Simultaneously, in these countries annually comes a large workforce from some of the least developed countries and from African and Asian countries. The interest of the Middle East for the labor force is related to the development of the oil industry from the '70s. In the late '70s, Saudi Arabia, Oman, Kuwait, UAE, worked over 3 million foreign workers and specialists from neighboring Arab countries, India, Pakistan and South Korea.

In the last decade has been formed a new regional center of attraction of labor force - South-East Asia. Starting with the '70, here takes place a process of accelerating the country's industrial development and internationalization of economic life in this giant region, influenced by massive foreign investment. An important role in these processes went to different transnational corporations from different national origin: American, Japanese, Australian, South Korean, etc.

The main feedback of the process of migration is the migrant’s remittances. They represent their financial sources, delivered in the origin countries. In 2002, migrant remittances constituted about 79 billion dollars. This amount is more than the sum of all development aid provided by the states of the world and about 40% of total FDI in developing countries.

The use of foreign labor force, in present, becomes an important part of normal and efficient operation of the world economy mechanism. Transnational corporations (TNCs), being the main driver of globalization, acts in a global economy that relates to global production, global capital, global market.

TNCs are the best bet people can work and earn money. Leaders are cooperating in an effort to bring about real reform in a way that was unthinkable a few years ago. They deserve the world’s energetic support. Therefore, lots of host countries as can as possible try to attract in order to allocate affiliates of large transnational corporations in their countries, because of huge vacancy for the unemployment by TNCs.

The main reason leading companies to internationalize their assets are: achieving higher profits with low costs and of enhanced profitability. This can be achieved by exploiting opportunities offered by other countries with cheaper raw materials and human resources, by the penetration of more advantageous markets for export. Not at least, among the positive effects of capital and technology exports are repatriating their earnings as profit in the origin countries of TNCs.

However, many scientists try to show the dependence between migration and trade. They say that determining the volume of trade without taking into account migration, it is not objective. Testing in some small economies shows that there is dependency between export and migration.

The practice of international labor migration has emerged as a spontaneous phenomenon but, with the development and intensification of the process, began to be regulated by the state. However, currently are not liquidated all features of this process.

The last decade of the XX century is characterized by the fact that importing countries and exporting countries of labor force introduce radical correction in their migration policy. As world practice shows, workers migration provides indisputable advantages to the countries: for those providing employment as for those who receive it.

For the control of migration processes, states have begun to introduce so-called migration rates. Labor force - importing states, taking into account the real needs and labor market situation, determine the number of labor resources to be imported.

The goal of migration policy of the exporting countries is that labor force migration should increase the reduction of unemployment, receipt of foreign funds from immigrant workers, i.e. remittances, which is used for balancing imports - export operations. But sometimes, there may appear acute economic and social problems. Positive consequences of labor force migration:

- settling the problem of unemployment;

- the emergence of additional sources of income from migrants for exporting countries;

- obtaining the knowledge and experience by the immigrants;

- investment income of immigrants in small business, favoring the opening of new jobs.

Negative consequences of immigration workers:

- the trend of increase in consumption funds obtained abroad.

- the tendency to hide income;

- "brainwashing".

- decrease the qualification of unemployed immigrants.

- However, both for countries of origin as for TNCs host countries, in addition to the earnings of the process of globalization, there are also losses. The transfer to other countries of a part of the assets of TNCs contributes to job losses and rising unemployment in countries of origin. Moreover, labor productivity growth through technology transfer, information, innovation in firms purchased by foreign investors, brings with it an increase in unemployment in the host countries, in particular for unskilled or low skilled labor force. Host countries are frustrated that research and development operations are in countries of origin of TNCs, and technological innovations aren’t implemented simultaneously in the host countries.

- Workforce in developing countries means, for industrial countries, providing some branches and infrastructure with needed workers, without which it is impossible a normal industrial process, and sometimes normal everyday life. For example, in France, migrants make up 1/2 of total employment in construction, 1/3 - in the car industry, in Belgium - half of the miners, in Switzerland - 2/5 of the construction workers.

- As mentioned above, one of the key features of the process of globalization is the movement or free flow of capital. In addition, current global trade regime under WTO auspices provides unique possibilities for movement and reallocation off funds. Transnationalization of the world takes place differently in each country. Some countries have more foreign capital, others less. The trend that it is observed today is that where foreign capital is moving there will focus large flows of people.

- Even if corporations come in underdeveloped countries, they don’t offer great benefits to employees; on the contrary, they came just as attracted by low wages and slave pyramid style of local systems. Citizens of third world are seeking to reach the West, believing that they perform the same work more and will gain more money. Their surprise occurs when, once arrived in Europe, all companies have their production moved to countries where they originally came, now they must re-orientate or accept jobs below their qualifications.

Although the products are cheaper because they are performed in countries where production costs are minimal, this migration of labor force generates unemployment in developed countries and, therefore, the remaining unemployed have no money to buy products even so not cheap. Forbes magazine has published a study showing that Detroit will disappear in the next 20 years, this outsourcing and refurbishment made that unemployment in this city to be enormous, and now crime is at unimaginable odds. From a towering American city - king of the automobile production, with millions of habitants - now have left only 900 thousand people.