Globalization: Environmental and Health Practices of American Companies Abroad

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Globalization: Environmental and Health Practices of American Companies Abroad

Photograph

By: Indranil Mukerjee

Date: August 14, 2003

Source: INDRANIL MUKHERJEE/AFP/GettyImages.

About the Photographer: Indranil Mukherjee is a professional photographer and journalist. This photograph is part of the collection at Getty Images, a worldwide provider of visual content materials to such communications groups as advertisers, broadcasters, designers, magazines, new media organizations, newspapers, and producers.

INTRODUCTION

Since the end of World War II, the world has engaged in an unparalleled transfer of currency, capital, trade, and human resources between countries, called globalization. This flow across borders has created debates about development, economic theory, and fair trade practices, due largely to its effect on workers and the environment in developing countries. Supporters of globalization assert that this transparent flow of trade and currency facilitates the expansion of economic growth and opportunities globally. Opponents to globalization maintain that it has promoted unfair labor and trade practices and environmentally harmful policies in developing countries. In addition, globalization has increased the income gap between high-income or developed countries, referred to as countries of the North, and low-income or developing nations, referred to as countries of the South (due to their relative geographic locations).

Globalization implies a global economy where goods and services move across borders without difficulty. This movement across borders includes investments, capital, labor, and technology. The phenomenon of globalization involves an increased integration of global economies in the form of advanced world trade and fast-moving international financial markets. Supporters of globalization maintain that globalization has also allowed the spreading of knowledge and democracy, which facilitates a robust, more widely employed workforce and, therefore, a future without conflict. Leading the globalization movement are multi-national corporations (MNCs) and trans-national corporations (TNCs). Opponents of globalization assert that these corporations are responsible for a continued decline in standards in developing countries. They suggest that the integration of global markets has allowed MNCs and TNCs to force developing countries in the South to relax regulations governing environmental and labor standards or risk losing international investment and jobs.

PRIMARY SOURCE

GLOBALIZATION: ENVIRONMENTAL AND HEALTH PRACTICES OF AMERICAN COMPANIES ABROAD

See primary source image.

SIGNIFICANCE

One of the leading TNCs expanding its global reach is the American based Coca-Cola Company. Coca-Cola operates in over 200 countries and possesses an iconic status due to its historical longevity and global reach. In 1999, the Coca-Cola company opened up a bottling facility in Plachimada, Palghat district, Kerala in India. The company located the factory amidst an agricultural region with access to common ground water. When the company began to access the groundwater, also accessed by local farmers, the corporation drew 1.5 million liters a day from the water resource. After six months of drawing from the local groundwater, the community began to feel the affects of the plant's activities. Villagers began to see a decrease in their water tables. The water shortage also affected Coke, as the company was only able to extract 800,000 liters per day. Local villagers affected by the decreased water supply claim that Coke's mining of groundwater has dried up and contaminated local wells. As a result, the Coke facility has been the site of continued protests.

The Coca-Cola Company addressed the water scarcity issue as a part of its 2005 annual report. The company provides two villages most affected by the water shortage with daily truckloads of water. However, many consider this a short-term cure to a larger issue. Protesters at the Coca-Cola plant accuse local leaders of corruption and collusion with the company. Protesters cite the lack of laws regulating private industries from extracting groundwater. However, officials have acted by closing the bottling facility, pending a courts decision on the fate of the plant. The Coca-Cola company has also begun to work with environmentally minded non-governmental groups, such as the World Wildlife Fund and CARE, implement new water resource policies that will capture enough water without affecting the local environment.

In addition to the water shortage issue, the Coca-Cola Company was also cited for the presence of pesticides in its products. The Centre for Science and Environment, located in New Delhi, conducted research on the top soda brands marketed in India by Coca-Cola and PepsiCo. The study showed elevated levels of insecticides and pesticides in the sodas. The insecticides DDT, malathion, lindane, and chloropyrifos were present in 81 percent of samples tested. A Delhi High Court mandated retest resulted in a confirmation of the original tests results. The initial publication of these results resulted in an initial decrease in the sales of sodas in India. However, subsequent tests revealed that the insecticides and pesticides were present in the groundwater extracted locally, not added by the companies.

The increased movement of goods and services created by globalization has created an unprecedented openness among countries. It has also led to increasing competition between different countries and regions for factories, jobs, and tax revenue. Given these competitive pressures, many countries have resisted efforts to improve environmental and labor standards for fear that they will drive up costs and hurt their ability to compete in the global marketplace. Those who support the implementation of international fair labor standards and environmental regulations argue that the lack of such standards and regulations propels the developing countries toward lower wages and declining environments.

Those who oppose globalization suggest that the concern regarding environmental exploitation is not merely a production issue. These groups cite that the control of a nation's natural resources, such as oil, diamonds, water and timber frequently lead to civil wars and unrest. As natural resources become scarcer and the global population increases, the threat of continued conflict remains due to the struggle to possess control over these resources.