restricted access Human Rights and MNCs: Theory Versus Quantitative Analysis
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Human Rights and MNCs:
Theory Versus Quantitative Analysis

I. Introduction

This study seeks to establish what effect multinational corporations have on human rights in the third world. Two theories of multinational corporations and human rights, the engines of development thesis and the Hymer thesis, serve as a point of departure. Using two different indicators of direct foreign investment to measure the presence of multinational corporations, this study finds them to be positively associated with political rights and civil liberties as well as with economic and social rights in the third world. This result supports the engines of development school. This study does not find any empirical evidence to support the Hymer thesis.

II. A Need for New Research

It is widely accepted that multinational corporations (MNCs) have a massive economic impact on third world nations. It is also a “tenet of faith among politicians, financiers, and academicians” that “economic development enhances human rights conditions.” 2 Yet the potential impact of MNCs on human rights in developing countries is often overlooked. International documents on human rights only rarely mention MNCs in any specific way, and theories and empirical studies of human rights stop short of considering [End Page 368] the MNC as an actor in promoting human rights. Thus, there is a need for new research on rights, businesses, and development in the third world.

A. Political Factors

Discourse on the promotion of human rights and investigations into human rights violations have revolved primarily around nation-states. The politics of rights, legal protection of rights, and most philosophical treatments of human rights posit nations as the primary actors. All international documents on human rights limit liability for violations to “state parties.” 3

Very few international initiatives address questions of regulating the behavior of multinational corporations. Those initiatives that do exist are voluntary and nonbinding. They focus on the economic impact of these enterprises, while only briefly or indirectly speaking of the corporate impact on rights. For instance, the UN Commission on Transnational Corporations has called on multinationals to: respect human rights; abstain from involvement in, and subversion of, domestic politics in host nations; practice nondiscrimination; respect host government priorities on employment, the environment, and socioeconomic policy; and cease collaboration with racist politicians in South Africa. 4 Yet, these are only recommendations. There are basically no binding legal obligations on MNCs to promote or to protect human rights. Human rights obligations for transnationals as a function of legal rights obligations is a “null set.”

B. Philosophical Factors

Like politicians, human rights philosophers also commonly argue that rights obligations fall only upon governments. Rex Martin’s views are a typical example. 5 Like many others, he argues that human rights constitute principally claims against governments because practices for recognizing and maintaining rights are purely within the domain of public (state) actors. 6 Martin disputes Maurice Cranston’s well-known position that “human rights are rights of all individuals against all individuals.” 7 Martin points out that [End Page 369] the documents themselves identify governments as parties to the various human rights agreements. States are responsible for establishing mechanisms to provide for the rights of due process, fair trials, nondiscrimination, etc. At most, Martin argues, human rights might be “‘double-barreled,’” 8 creating specific obligations for governments and more general obligations for society at large. The most significant responsibilities, however, remain those required of states. 9

Neither Martin nor Cranston, nor the schools of thought they represent, 10 consider the possibility that human rights claims might create obligations for corporations as well. However, recent innovations in the philosophy of rights and in economic theory tend to stress the moral and social dimensions of MNCs. 11 This growing body of literature can be understood to argue that corporations do have specific moral obligations regarding the protection and promotion of human rights. Hence, any empirical study of MNCs and human rights must necessarily address the philosophical distinction between legal rights and moral rights. 12

Perhaps the best of these new treatments is that by Peter French. French believes that the changing nature of postmodern politics and the socioeconomic influence of large corporations often make them more important than states when it...