Discuss the Role and Impact of Tncs in the Global Economy Essays

1076 Words Apr 16th, 2016 5 Pages
Discuss the role and impacts of TNC’s in the global economy. (40 marks)

Transnational Corporations (TNC’s) play a large role in the development of the global economy, through the sharing of research, trade and technological advances between the different countries. They also play a big part in increasing the interconnection in the world’s economic, cultural and political systems, otherwise known as globalisation. Nevertheless there are both positive and negative impacts that TNC’s bring to the global economy, socially, economically, politically and culturally.

The world has seen a huge rise in the number of Transnational Corporations. Since the 1970s the number of TNCs has risen from 7,000 to over 60,000. To begin with, around 95%
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The development gap is also widened as workers in the developing world are paid less to make the same products or provide the same service.
For example, BT, a company that has operations in around 170 countries, has shifted their customer call service from India to the UK. The exploitation of cheap labour has had both positive and negative impacts. 5,000 people that BT has employed in India have not only been supplied with a job but also with invaluable skills. The money that they earn would contribute to the family income, boosting the standard of living for both the employees and the employees’ family. The TNC is also puts money into the Indian economy, contributing to economic growth and boosting the countries GDP. Many countries (including India and Brazil) which were classified as developing countries, have become newly industrialised countries (NICs).
Nevertheless exploitation can occur as wages are set at very low levels and therefore the wealth has been shifted from the 5,000 people that would have been employed in the UK to the shareholders of the company through additional profit made from the competitively low wages paid to the workers.

There is also the question that many pose; are TNCs corrupting local cultures around the world? Montenegro is an example of a country that has banned TNCs such as McDonalds to push back against globalization. They believed that big global companies were dominating their