Describe some of the positive and negative roles played by Multinational Corporations (MNC's) in the contemporary world economy?

1557 Words Oct 2nd, 2005 7 Pages

What is a Multinational Corporation (MNC's)?

Multinational companies are firms with their home base in one country and operations in many other nations. Most of these very immense firms establish in third word countries or developing countries where they could manufacture the same identical product for very low costs compared to establishing the same firm in the western countries producing that product.

Although transnational corporations (TNC's) are commonly thought to be synonymous with MNC's they are infact different in several regards. The primary defining factor is that they keep their financial headquarters offshore to protect them from taxes. Ideally MNC's are one which are global operating across borders with no
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Production workers often learn better techniques while employed by foreign firms. Managers may learn about better practices by observing, or by having previously worked at multinationals themselves. And increased competition pushes all companies in an area where multinationals are operating to become more productive.

-Reliability & Awareness - When a product is associated with an MNC it is considered to be a good quality product and genuine as these firms follow the same standards and procedures to manufacture it wherever they are, which goes with their goodwill and reputation all over the world. For instance a burger at Mcdonalds will taste the same in Paris or India. This reliability helps the consumers to distinguish between the MNC product and local product thus creating awareness.

-No contribution to external Debts for Developing Countries - If the investment does not do well, the multinational corporations may lose their investment and the developing country does not receive the aforementioned benefits, but the developing country owes no restitution. As a result, multinational corporation investments do not contribute to the external debt problems of developing countries.

Negative Aspects of Multinational Corporation in an Economy.

Incidents such as the improper use in the Third World of baby milk formula manufactured
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