Pages

15 November 2022

Transnational Corporations, State Capacity and Development in Nigeria

Olusola Samuel Oyetunde

In the past few decades, transnational corporations (TNCs) have become significant political and economic actors in the international political economy due to advances in globalisation, leading to growth in their power and influence (Macleod and Lewis, 2004). However, their contributions to contemporary world development are among the most intensely debated issues in the 21st century. While some studies acknowledge the influential roles played by the TNCs in transforming the global economy, especially in terms of production internationalisation and Global Value Chains (Whitfield et al., 2020), others contend that the TNCs have created imbalances in world development trajectories (Wei, 2010; Ahen, 2019). Notwithstanding these contradictory perspectives, TNCs continue to exercise significant global socio-political influence, thereby making it crucial to assess the developmental roles of the TNCs in order to understand if they are conducive or incompatible with the development of their host countries.

Using Nigeria as a case study and the dependency theory as an analytical framework, this essay argues that the ability of TNCs to contribute to a country's structural transformation and development largely depends on states’ capacity to regulate their activities and hold them accountable. Although TNCs are essential actors in Nigeria’s developmental space, they serve as mechanisms of exploitation and underdevelopment (Eaton, 2017; Stephens, 2017). While Nigeria has benefited from the TNCs through infrastructural development and employment creation, their activities have produced social ills, such as increased poverty levels, political instability, environmental degradation, and human rights violations, due to the absence of an effective regulatory framework (Morvaridi, 2008; Eze, 2017). Consequently, these challenges have exacerbated development woes and deepened socio-economic inequality in Nigeria. However, the lack of state capacity to control the TNCs results from Nigeria’s peripheral position in the international division of labour and the rent-seeking attitude of some Nigerian elites, who, because of their vested interests, sometimes use state power to advance the interests of foreign capital (Kohli, 2004; Watts 2004). This has made the role of the TNCs incompatible with Nigeria’s development, as the adverse effects of their activities outweigh the positives.

Nigeria is a typical case due to the operation of several TNCs. The Shell Petroleum Development Company (SPDC) operations in the Niger Delta region of the country will be employed as a case study. This essay proceeds as follows: the first section after this introduction discusses the basic assumptions of dependency theory, followed by an assessment of the impacts of the TNCs on Nigeria’s development. The final section before the conclusion examines how Nigeria's lack of state capacity to regulate TNCs has contributed to its underdevelopment.

No comments:

Post a Comment