Self-Regulation through Voluntary Codes of Conduct

The current wave of globalization has brought about a radical transformation in geopolitical arrangements. It has shifted the locus of economic power and bargaining leverage between private economic institutions, national governments, and regulatory authorities. National governments in developing countries have had to compete among themselves to attract and maintain MNC investments. They have been forced to make concessions to the MNCs in terms of taxes and other “giveaways,” and thereby limit their ability to fashion domestic policies with better focus on national interest (Johnston and Yufan, 1995; Sethi, 2002). At the same time, governments of industrially advanced countries have been reluctant to exert political pressure because of domestic strategic and economic interests, and from a reluctance to interfere in the internal affairs of other sovereign nations. Nor have international organizations such as the United Nations and multilateral and regional entities organizations such as the World Bank, International Monetary Fund, and Asian Development Bank shown a willingness to cooperate and create effective and enforceable oversight mechanisms.