Human Rights and MNCs

Recently, the risk analysis company, Maplecroft, published its 2013 Human Rights Risk Atlas, revealing a variety of human rights violations around the world. The findings demonstrate not only a rise in some of the most serious human rights violations, but also that more countries are joining the categories of “extreme” or “high risk” based on their human rights records. Maplecroft CEO, Alyson Warhurst, released the following statement regarding the findings, "Multinational corporations are particularly vulnerable to allegations of complicity in human rights abuses, due to their complex supply chains…Business investment is deeply rooted in emerging economies and many of these countries are affected by social tensions. A decline in the human rights risk landscape is not only an unacceptable situation; it is also a forecaster of political risk and business disruption." Implying that worse human rights practices lead to a decline in overall stability particularly conducive to product output. However, do MNCs truly care about human rights practices when determining whether or not to invest abroad? An empirical study on the determinants of FDI would suggest yes (Blanton and Blanton 2007). More importantly, how does foreign direct investment or MNC involvement affect human rights practices in the host countries? Other research by Layna Mosley (2011) focusing on the relationship between workers’ rights and MNCs suggests that certain types of MNCs positively affect labor rights. Multinational production that is subcontracted as opposed to directly owned can result in a race to the bottom in labor rights practices. The results from these studies demonstrate that MNCs and FDI can have a positive influence on human rights practices at both stages of the process—the beginning and end. However, these positive results are conditional on a number of factors. Thus, begs the question—when is it favorable to MNCs or FDI for human rights violations to become an important factor? Does a governments’ human rights record matter for FDI or MNC prior or post investing in a certain country? Is it always in the best interest of the corporation to “care” about the host governments’ human rights practices?