Codes of Conduct for Multinational Corporations: An Overview

James K. Jackson
Specialist in International Trade and Finance

The U.S. economy has grown increasingly interconnected with other economies around the world, a phenomenon often referred to as globalization. As U.S. businesses expand globally, however, various groups across the social and economic spectrum have expressed their concerns over the economic, social, and political impact of this activity. Over the past 15 years, multinational corporations and nations have adopted voluntary, legally enforceable, and industry specific codes of conduct to address many of these concerns. Congress will continue to play a pivotal role in addressing the large number of issues regarding internationally applied corporate codes of conduct that remain to be negotiated.

Over the last decade, international flows of capital have skyrocketed. International flows in dollars, for instance, now total over $3.2 trillion per day, or more than the total annual amount of U.S. exports and imports of goods and services. These flows are the prime mover behind exchange rates and global flows of goods and services. One part of these flows is foreign direct investment, or investment in businesses and real estate. On a cumulative basis, direct investment now totals over $10 trillion world-wide, about 20% of which is associated with the overseas investment of U.S. firms, the largest share held by the firms of any nation. This type of investment spans all countries, industrial sectors, industries, and economic activities and has become a major conduit for goods, capital, and technology between the developed and the developing economies. Foreign direct investment has become a much needed source of funds for capital formation in developing countries and foreign investment accounts for important shares of employment, sales, income, and R&D spending in developing countries.


Date of Report: February 4, 2010
Number of Pages: 9
Order Number: RS20803
Price: $29.95

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