Business and Global Governance, by Ann Florini

I would like to call your attention to an interesting and important article written by Ann Florini, a Brookings Institite scholar. The article describes how corporations are struggling to cope with demands for greater accountability in the context of the global economy.

The world's 60,000 parent multinationals and their 500,000 foreign affliates account for nearly a quarter of of global economic output. These companies play a major role in shaping the economic development prospects of local economies in all nations on all continents across the world. That is a mental picture all of us should bear in mind as we work to strengthen our local economy. Disney Corporation has 300,000 suppliers worldwide. WalMart, now the largest U.S. corporation, has a huge number of suppliers that span the spectrum of rich and poor nations around the globe. Increasingly, WalMart and its "big box" counterparts are sourcing their products from the cheapest places on the planet so they can retain their ad tag line" Always Low Prices."

Corporate codes are a reality for many of these multinationals. Two types exist: 1) aspirational, which are more general; and 2) performance-based, which are more specific and have more teeth. While many companies have adopted aspirational codes of conducts, demands are growing for more attention to the performance-based codes, which track more closely how a corporation treats its customers, stockholders, employees and the communities they do business in.

Enforcing global codes of conduct is not easy, as Florini tells us. She says we should continue to try though since it is even in the company's best interest to protect its reputation.

Florini's article appears in the May 2003 issue of the Brookings Review, which is available on the newstand. You can also read the article at the Brookings website located here.