Two myths about multinationals

Video 92 of 245 from the course: Development Economics
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Here are two common myths about big business and why they are wrong.

 

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I think the best answer is Martin Wolf's. He says the comparison rests on an "elementary howler." It involves computing the size of corporations by sales but that of national economies by gross domestic product. But GDP is a measure of value added, not sales. If one were to compute total sales in a country one would end up with a number far bigger than GDP. One would also be double-, triple- or quadruple-counting.

SEE Martin Wolf, Countries still rule the world: The notion that corporations wield more power than governments rests on flawed calculations and conceptual confusion. Financial Times; Feb 6, 2002

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Not to mention the sovereignty, no private company has this kind of power to issue their own money, dictate mandatory rules (laws) and enforce it legally with their own repressive force and so on. In terms of money it make no sense to compare someone who must earn money with someone who issue money, in terms of wealth no private industry of the world has the resources that almost any nation-state have, in terms of real power on people also there are no point of comparison. I think that the statement that certain private companies are "bigger" than many countries has no sense. Any company can bankrupt, no nation-state broke.

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