Development capture
Transnational corporate capture of development trajectories serves as a mechanism through which powerful nations perpetuate the economic backwardness of impoverished nations, reproducing inequalities between the Global North and South.
Development capture consists of influencing the decision-making of development agencies in order to leverage development finance and diplomatic weight for private interests.
According to a report by the organizations Oyu Tolgoi Watch and the Center for Research on Multinational Corporations (SOMO), Oyu Tolgoi is Mongolia’s most important mine, with mineral deposits worth a third of the country’s GDP. Diplomatic cables sent from the U.S. Embassy in Mongolia revealed that the U.S. and other Western governments supported the multinational mining companies Rio Tinto and Ivanhoe Mines to pressure the Mongolian government and secure a favorable arrangement — the Oyu Tolgoi Investment Agreement (OTIA) — at the mine. Once the OTIA was signed, the World Bank and the International Monetary Fund offered Mongolia significant lines of credit in exchange for modifying laws to reduce taxes on mining corporations and increase their control over water and mineral resources (reversing the country’s attempt to implement a “windfall profits tax” and secure majority ownership of the mine).
The Mongolian case is emblematic because, on one hand, it displays the power of multinational corporations and States to join together, pressure, and ultimately capture the decision-making of a less powerful country. On the other hand, inherent in development capture is the vulnerability of the captured object, in this case the Mongolian State, which traded away its sovereignty in exchange for a huge mining project.
Another organization, The Sentry (U.S.),produces significant studies about the corporate capture of the State in development contexts. For example, the case of the Wagner Group’s presence in the Central African Republic shows how some multinationals operate with the assistance and in the interest of their home States (e.g. Russia), especially in contexts of geopolitical tension. China’s mining interests in the Democratic Republic of Congo are indicative of this as well.
According to Sarojeni Rengam from the Pesticide Action Network – Asia-Pacific (PANAP), when the ban on paraquat — a toxic chemical made by Syngenta and licensed to Chevron (U.S. only) that is widely used as an herbicide — was announced in Malaysia, “a regulator said that Syngenta had donated money to one of the political parties within the government’s ruling coalition. Also, in 2019, leading up to a proposed ban on the herbicide glyphosate in Thailand, the U.S. Ambassador appealed to the Minister of Agriculture not to ban pesticides [at the behest of the multinational Bayer]. The WTO pressured the government too. And it worked. This is the kind of influence that corporations have.”
Another example of development capture is CropLife International, a trade association representing the pesticide and biotechnology industries. The U.N. Food and Agriculture Organization (FAO) and CropLife have a formal alliance, which the Corporate Accountability Working Group (CAWG) fears could undermine the FAO’s ability to make decisions on agriculture without undue influence. CropLife International profits from the sale of products that impact biodiversity, ecosystems, and the health of farmers and indigenous communities.
An important book about development capture was sponsored by Development Alternatives with Women for a New Era (DAWN). In addition to analyzing the economic and political dimensions of capture, the book delves deeply into the indigenous groups, communities, women, and others affected by this practice.