Transnational Corporations and Human Rights
1
Transnational Corporations
&
Human Rights:
From Theoretical Relationship to Scientific Fact
Introduction
‘Engines of development’ or ‘tools of exploitation’? Intuitively, one of these two seemingly
contradictory research traditions on the effects of TNC activity must be at odds with the truth.
It will, however, be argued below that these extremes – each armed with their preferred
method and unit of analysis – merely are assessing different aspects of the relationship in
question. The former applies statistical analysis at the national level and finds positive
correlations between foreign direct investment and second-generation economic and social
rights, while the latter in country or corporate case studies finds numerous examples of
corporations’ human rights violations.
Although opting for general statements or even social laws, social scientists cannot
escape the complexity of the real world. Every theory is conditional, standing or falling with
its assumptions. Being aware of the conditions attached is therefore essential as one attempt
to understand contexts and compose policies based on theoretical frameworks. In economic
theory and policymaking this is no less true. That capitalism needs to operate within a
competitive legal framework for society to benefit from its existence is a widely held belief.
More contested is the notion that certain conditions must be satisfied in order for a host
country to benefit from the presence of the free markets’ superior agent, the transnational
corporation (TNC).
However, methodological as well as theoretical concepts can help bridge the gap
between the two research camps referred to above, although commonly understood as
incompatible, they become complementary rather than contradictory. Methodologically, as
they both – in a Lakatosian sense – are parts of distinct research programs, the positive
findings of the former need not come at the expense of the negative findings of the latter.
Theoretically, as will be demonstrated below, three explanatory fruitful concepts can help
shed some light on the Janus-faced nature of TNCs’ human rights effects: The sectoral
composition of the investments, the host countries’ level of created assets and the bargaining
Convention