Explain How Mncs Benefit Both Rich And Poor Countries

Critics of TNCs argue that this ripple effect is a myth. Rather than benefitting those in the local economy, critics contend that the beneficial effects “leak out” of the local economy to benefit other places, chiefly back to the home nation (Shepard, Porter, Faust, & Nagar, 2009, p. 519). In addition, local firms may find it impossible to compete with the goods produced by the TNC due to beneficial tax breaks and the alleviation of labor restrictions that many TNCs enjoy in host nations (Shepard, Porter, Faust, & Nagar, 2009, p. 525). Employment by TNCs may also not benefit a host nation’s economy or people in a significant way. Wages for workers at many TNCs are low due to removal of employment regulations in places

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).

TNCs dominate industrial production including manufacturing and services, therefore further dividing the gap between the rich and the poor, and being the main leader of globalisation as a consequence.

(Hopkins, 2006) Multi-national companies (MNC) such as Wal-Mart have revenues which exceed the gross domestic product of nations. MNCs dominate the global marketplace.

of the technology also creates many new jobs to people. There is a big need for the

Growth of TNCs is down to geographical flexibility and being able to shift resources and production between locations on a global scale in order to maximise profit margins. For example, Coca Cola Hellenic is leaving Greece; this is so that they don’t lose any more money than they already have done. Athens stock exchange is a lot smaller than it used to be, which has meant the general economic “sickness” in the country depresses prices of all companies there. So, the company is to move its domicile from Greece to Switzerland and the stock listing from Athens to London. This example perfectly summarises how and why TNCs pack up in certain countries and go on to the next - to make profit, which is what all-multinational companies are out to do, “make a buck.” The growth in TNCs is also the idea of shifting to a more flexible production system, like “JIT” production, which stands for Just-In-Time. This type of production is exactly what it says on the tin, an order is placed with the company and only then do they start making the product, this saves time, space and money, as products are not left in warehouses until an order is placed. This allows for products to be made quickly and efficiently.

The definition of the TNC's is any corporation that is registered and operates in more than one country at a time; also called a multinational corporation. They operate franchise all around the world like Coca-Cola, Google, Nike, McDonalds and many, many more.

Developing countries find it hard to put the technology into place, but with the help of the developing countries it is a lot easier.

As they grow, their dominance becomes stronger, and their influence over the economy is significant. These mega cities in developing nations are often major centres of manufacturing and labour intensive work. They have a high population and unemployment rate, which leads to cheap labour, as companies are able to employ large amounts of people at a low cost. This benefit therefore makes mega cities attractive destinations for TNCs. New York for example, has the United Nations headquarters located within it, as well as Google, American Express, and J.P.Morgan, and London, has the headquarters of Citi Bank, and Goldman Sachs. Therefore, TNCs influence in the global economy allows them to become chief competitors in the global market, and that developing nations are dependent on world cities for employment, and trade, and this gives world cities their economic authority.

Transnational corporations help control the economic market in developing countries. TNCs do this by helping the balance of payment export material as a result of increasing the Growth Domestic Product (GDP). An example of this would be manufacturing where companies such as Walmart are much wealthier and larger. By manufacturing plenty of products to larger companies,

“A multinational enterprise is a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collison, 2012). A firm on the other side operates within the national borders of a country. Some firms want to expand, not only in sizes but also in value and market share, by becoming MNEs. This is due to the fact that it can bring remarkable advantages even though is very risky. MNEs perform international business operations named as: Exports and Imports, Foreign Direct Investment (FDI). The first branch includes the goods and services that are produced in a country and sold in another one and vice versa, the second branch consists in equity funds invested in foreign countries. It is when firms begin to use FDI that they become MNEs.

Mncs grow their exercises to a remote nation for various mind including, among others, the misuse of economies of scale/CRO, the utilization of particular vantage, regularly owing to a life cycle example of their item or

Now few MNC companies entered into India. The new entrees have taken of 15% of the projects from the existing players. In our industry there is a huge capital investment is required and it is not very easy to enter into the industry. Like L & W Pvt. Ltd

The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,

These reasons may be seen as a countries ‘expectations’ when attracting the MNC’s foreign investment and over the last 30 years have proved to be a dominant contributor to the growth of developing countries (Jajri, 2009).