Extractive industry goes abroad because that is where mineral sources lie while other companies go simply to find new markets. Moreover, a third type of multinational corporation exists, the technology-intensive company. However, a major cause of misunderstanding has been that, while multinational firms respond to business imperatives, the governments of developing nations must react to political realities.
Multinational corporations MNCs engage in very useful and morally defensible activities in Third World countries for which they frequently have received little credit. Significant among these activities are their extension of opportunities for earning higher incomes as well as the consumption of improved quality goods and services to people in poorer regions of the world.
Because many of these firms originate in the industrialized countries, including the U. Thus, some proponents of these views urge the expulsion of these firms, while others less hostile have argued for their close supervision or regulation by Third World governments. Incidents such as the improper use in the Third World of baby milk formula manufactured by Nestle, the gas leak from a Union Carbide plant in Bhopal, India, and the alleged involvement of foreign firms in the overthrow of President Allende of Chile have been used to perpetuate the ugly image of MNCs.
The fact that some MNCs command assets worth more than the national income of their host countries also reinforces their fearful image.
And indeed, there is evidence that some MNCs have paid bribes to government officials in order to get around obstacles erected against profitable operations of their enterprises. Several governments, especially in Latin America and Africa, have been receptive to the negative images and have adopted hostile policies towards MNCs.
However, a careful examination of the nature of MNCs and their operations in the Third World reveals a positive image of them, especially as the allies in the development process of these countries.
Even as MNCs may be motivated primarily by profits to invest in the Third World, the morality of their activities in improving the material lives of many in these countries should not be obscured through misperceptions.
The first point to recognize about MNCs is that, besides operating under more than one sovereign jurisdiction, they are in nature very similar to local or non-multinational firms producing in more than one state or plant.
We may call such multi-plant firms uninational corporations UNCs. Indeed, the experience of European countries soon to become more unified economically or the former Soviet Union now breaking up into several sovereign or quasi-sovereign states should impress us of the fact that the United States or Canada easily could have been several independent countries, and some present UNCs would have been MNCs.
It is to enable MNCs to pay such dividends that their managers seek out the most efficient workers for the wages they pay, buy materials at the cheapest costs possible, seek to produce in countries levying the lowest profit taxes, and sell in markets where they can earn the highest revenues after costs.
This is no different from anyone seeking employment at the highest wage for the least amount of tedium, the most congenial work environment and location, and the highest employment benefits.
Perhaps the main difference between uninational and multinational corporations is that the latter have been more successful than the former, and as a result have expanded their activities to many more regions and sovereign states. Many do recognize UNCs or local firms as helpful agents in the development of the communities in which they operate.
Primary in this recognition is the employment they create and the higher incomes earned because of their having established in the region. These firms also rent buildings and land, or sometimes buy them, thus generating higher incomes for their owners.
For example, in the absence of the present Japanese owners having bid for the Rockefeller Center in New York, the price its American owners would have gotten for it would have been lower. The same applies to the income prospects of owners of the Seattle Mariners should the sale of this club to the Japanese buyers go through.
In their absence, the people would have had fewer or much lower paying jobs, and the demand for land and other local resources would have been lower.
Without the operators of such hotels as the Holiday Inn, the Sheraton, the Hyatt, Four Seasons, and the Hilton having leased or bought beach-front properties in several of the popular tourist resorts in the Third World, their owners individuals or government might have received much less for their sale.
Such purchases also release the capital of resource owners for investment in other enterprises. Some of those who recognize little positive contributions from MNCs to the economics development of the Third World countries might, however, acknowledge that these firms pay higher wages to local employees than they typically would receive elsewhere, and higher rents for land and buildings.
But they often argue that the wages in Third World countries are lower than those paid by MNCs in the more developed countries, and the working conditions are not of the same standard.
However, the comparison misses several key points. For example, the skill or educational levels of workers in the Third World and those of the more developed countries are not the same. The amount of machinery and equipment handled by workers in the two locations are also different. In short, the amount of output generated by a worker in the Third World is typically smaller than that produced in the more developed world.
Indeed, if MNCs could hire enough of higher skilled workers in the more developed countries at the wages workers are paid in the Third World, they would gladly do so.
They would thus earn higher profits while selling their goods and services at lower prices. But the fact is that the voluntary exchange system in which MNCs operate would not permit them.Because of the great increase in the traffic in culture, the large-scale transfer of meaning systems and symbolic forms, the world is increasingly becoming one not only in political and economic terms,but in terms of its cultural construction as well; a global ecumene of .
Although China is in the midst of economic "reforms", these serve only to help the Chinese economy and foreign investors, not workers who, on the average, make less than $ a day (Mann, ).
Dumping is the export of products at less than "normal value," often defined as the price at which those products are sold in the home market. Impact of Multinational Corporations on Developing Countries.
Print Reference this. since technological advancements require huge research and development funds that the developing countries just do not have.
So it makes sense for them to open up their markets in exchange for a technology that could make them self reliant and self. GB Chapter 3 study guide by brfx includes 82 questions covering vocabulary, terms and more.
an organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management--usually extremely large corporations like Nestle but: ONLY FIRMS THAT HAVE MANUFACTURING.
Multinational companies whose importance has increased or improved depending on global capitalisation and travelling around the world without knowing borders have activities in developing countries due to suitable conditions (e.g.
cheap workers costs, flexible legal arrangements).