Examine the Impact of Multinational Corporations Setting up in Developing Countries
Examine the Impact of
Multinational Corporations
Setting up in
Developing Countries
There has been a very controversial debate over years now about the impact of multinational corporations setting up in developing countries, which have many supporters as well as opponents. Surely there is not only one way to look at this more and more common phenomenon that affects the host countries in many both positive and negative ways that are discussed in this paper.
The term multinational corporations (MNCs) is used “to identify firms that have extensive involvement in international business and engage in foreign direct investment (FDI). MNCs own and control value-adding activities in more than one country that are usually coordinated from central headquarters” (Griffin and Pustay, 2005).
The investment of MNCs in the developing countries has greatly increased since the mid-1980s, because of globalization as they looked for new resources and larger markets (Greer and Singh, 2000). Presently, there are over 35,000 multinational corporations with more than 15,000 foreign subsidiaries, which is around one-third of the whole world production. Their value is estimated to be more than $1.5 trillion, one-third of which in the developing countries (GhanaWeb, 2012).
The developing countries with most multinational investment are those with highest growth potential like Asian countries: China, Malaysia, Thailand, Singapore, and Latin American ones: Mexico, Argentina and Brazil. The African countries get less than 4% while the poorest 50 countries worldwide receive less than 2%. Over a half of business activities of MNCs deal with manufacturing and services and one-third with oil and gas (GhanaWeb, 2012).
According to the report by the Institute for Policy Studies out of 100 largest world economies, based on corporate sales and country GDPs, 49 of those economies are countries while the other 51 are multinational corporations. Also, it is stated that the
Multinational Corporations
Setting up in
Developing Countries
There has been a very controversial debate over years now about the impact of multinational corporations setting up in developing countries, which have many supporters as well as opponents. Surely there is not only one way to look at this more and more common phenomenon that affects the host countries in many both positive and negative ways that are discussed in this paper.
The term multinational corporations (MNCs) is used “to identify firms that have extensive involvement in international business and engage in foreign direct investment (FDI). MNCs own and control value-adding activities in more than one country that are usually coordinated from central headquarters” (Griffin and Pustay, 2005).
The investment of MNCs in the developing countries has greatly increased since the mid-1980s, because of globalization as they looked for new resources and larger markets (Greer and Singh, 2000). Presently, there are over 35,000 multinational corporations with more than 15,000 foreign subsidiaries, which is around one-third of the whole world production. Their value is estimated to be more than $1.5 trillion, one-third of which in the developing countries (GhanaWeb, 2012).
The developing countries with most multinational investment are those with highest growth potential like Asian countries: China, Malaysia, Thailand, Singapore, and Latin American ones: Mexico, Argentina and Brazil. The African countries get less than 4% while the poorest 50 countries worldwide receive less than 2%. Over a half of business activities of MNCs deal with manufacturing and services and one-third with oil and gas (GhanaWeb, 2012).
According to the report by the Institute for Policy Studies out of 100 largest world economies, based on corporate sales and country GDPs, 49 of those economies are countries while the other 51 are multinational corporations. Also, it is stated that the
Bibliography: Adeyeye, A. (2012). Corporate Social Responsibility of Multinational Corporations in Developing Countries: Perspectives on Anti-Corruption. Cambridge University Press. London, UK. Griffin, R. and Pustay, M. (2005). International Business. A Managerial Perspective. Prentice Hall, New York, USA. Greer, J. and Kavaljit, S. (2000). A Brief History of Transnational Corporations. Corpwatch. Global Policy Forum. Jones, G.& George, J. (2008). Contemporary Management. McGraw-Hill/Irwin. New York, USA. Online Articles Action Institute. Multinational Corporations in the Third World: Predators or Allies in Economic Development? http://www.acton.org/pub/religion-liberty/volume-2-number-5/multinational-corporations-third-world-predators-o. Accessed 2/05/2012. GhanaWeb. Multinational Corporations and the Developing World. http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=171863. Accessed 3/05/2012. Global Issues. The Rise of Corporations. http://www.globalissues.org/article/234/the-rise-of-corporations. Accessed 4/05/2012. Institute for Policy Studies. Top 200: The Rise of Corporate Global Power. http://www.ips-dc.org/reports/top_200_the_rise_of_corporate_global_power. Accessed 2/05/2012. The World Bank Group. Multinational Corporations in Developing Countries and Corporate Social Responsibility. http://info.worldbank.org/etools/bSPAN/presentationView.asp?EID=417&PID=827. Accessed 3/05/2012.