Abstract
The tragedy at Union Carbide’s plant in Bhopal, India, late in 1984 raises a host of difficult legal, economic and policy issues. The headlines were filled with news of the disaster and of the filing of lawsuits by plaintiffs’ lawyers, including ‘King of Torts’ Melvin Belli, for billions of dollars. Yet most of the attention merely reacted to the events and missed fundamental questions: Why was the plant built? Why did a foreign company have working control? What interests were served by the fact that Indian nationals owned a majority of the equity stock in the subsidiary and that the plant managers were Indians? Should countries accept foreign economic presence only in the form of financial capital, or management or both? Management is often sought because of the need to use foreign managers to train indigenous ones (this process was thought to have been completed at Bhopal). Should such issues affect how investments are regulated in terms of the environment, safety, and other interests?
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Notes
For a very lucid description of this debate see Raymond Vernon, Storm Over the Multinationals (Cambridge: Harvard University Press, 1977);
Michael P. Todaro, Economic Development in the Third World, 2nd edn, (New York: Longman, 1981) pp. 400–407.
countries see David J. Goldsbrough, ‘The Role of Foreign Direct Investment in the External Adjustment Process’, IMF Staff Papers 26 (December 1979) 725–54.
For an analysis of the issue applied to Indonesia see J. Panglaykim, ‘The Role of International Business in the Theory and Practice of International Trade’, The Indonesian Quarterly 10 (July 1982) 32–47.
See World Bank, World Development Report 1984 (Washington: Oxford University Press, 1984) pp. 220–1;
International Monetary Fund, World Economic Outlook (Washington, April 1986) p. 200;
and OECD, Investing in Developing Countries, Fifth Revised Edition (Paris, 1983) pp. 15–24.
For a thorough discussion of the historical trends and future prospects of international capital flows see International Monetary Fund, International Capital Markets: Developments and Prospects, 1984, Occasional Paper No. 31 (Washington, August 1984) 3–11.
Ibid., p. 9, World Bank, World Debt Tables, 1985–86 edn, (Washington, 1986) pp. xi–xii.
Department of Economic and Social Affairs, United Nations Secretariat, Multinational Corporations in World Development (New York, 1973), extracted and reprinted in Development Digest, 12 (January 1974) 67–80.
for a good historical overview of Indonesia see M. C. Ricklefs, History of Modern Indonesia (Bloomington: Indiana University Press, 1981).
For an excellent review of the problems inherited by the Suharto government in 1967, see Seth Lipsky and Raphael Pura, ‘Indonesia: Testing Time for the New Order’, Foreign Affairs 57 (Fall 1978) 186–202.
Richard D. Robinson, National Control of Foreign Business Entry (New York: Praeger Publishers, 1976) p. 2.
For a good overview of the importance of the Indonesian Armed Forces in domestic commercial enterprises, see Alain Cass, ‘Army Has Dual Role in Business World’, Financial Times 10 March, 1986, p.VI.
For an excellent appraisal of the energy sector for Indonesia see American Embassy Report, ‘Indonesia’s Petroleum Sector’, (Jakarta, July 1985) and H. Hill, ‘Survey of Recent Developments’, Bulletin of Indonesian Studies (August 1984) 28–31.
World Bank, World Development Report 1984, p. 254 and D. S. Simandjuntak, ‘Perspectives on the Indonesian Economy: Towards the year 2000’, The Indonesian Quarterly 12 (January 1984) 33–5.
Hill, pp. 22–5 and A. R. Rangkuti, ‘Preservation of Self-Sufficiency in Rice’, The Indonesian Quarterly 14 (April 1986) 243–52.
For an overview of recent developments in the agricultural sector see Bruce Glassburner, ‘Survey of Recent Developments’, Bulletin of Indonesian Economic Studies 22 (April 1986) 22–32.
BPS, Statistik Industri, (Jakarta, 1984)
and Shim Jae Hoon, ‘What About the Workers’, Far Eastern Economic Review 4 June, 1987 pp. 64–6.
For an excellent overview of employment generation in the manufacturing sector, see Mayling Oey, ‘The Role of Manufacturing in Labour Absorption: Indonesia during the 1970s’, The Indonesia Quarterly 14 (April 1986) 253–76.
For discussion of the goals and targets of each development plan see A. R. Soehoed, ‘Industrial Development during Pelita III’, The Indonesian Quarterly 10 (October 1982) 39–62;
See Richard Butwell, ‘Indonesia, How Stable is the Soldier-State?’, Current History 75 (December 1978) 212–16;
and Shim Jae Hoon and Rodney Tasker, ‘Signals for Suharto’, Far Eastern Economic Review 1 May 1987, pp. 32–3.
See Michael Morfit, ‘Pancasila: The Indonesian State Ideology According to the New Order Government’, Asian Survey 21 (September 1981) 838–51 for an excellent review of the five guiding principles of Pancasila.
See Susuma Awanohara, ‘The New Call to Prayer’, Far Eastern Economic Review 24 January, 1985, pp. 26–31.
For an analysis of income distribution and the problems of measurement in Indonesia see G. A. Hughes and I. Islam, ‘Inequality in Indonesia: A Decomposition Analysis’, Bulletin of Indonesian Economic Studies 17 (July 1981) 42–71.
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© 1988 Robert B. Dickie, BA, JD, and Thomas A. Layman, BA, PhD
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Dickie, R.B., Layman, T.A. (1988). The Historical, Political and Economic Context: An Introduction. In: Foreign Investment and Government Policy in the Third World. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-09157-7_1
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