Global Economic And Financial Crisis

2519 WordsJul 25, 201511 Pages
Many lessons were learned from the aftermath of 2008 global economic and financial crisis. One of them was the effect that foreign direct investments (FDI) had on the global economy, particularly on developing countries. By definition, an FDI is an “investment that involves some ownership and/or operating control. The foreign residents are usually multinational corporations (MNCs)” (Cohn 412). The market crash drastically altered the nature of FDI. After consistent growth between 2003 and 2007, investments in developed countries experienced a steep fall, suffering from about a 29 per cent drop. In contrast, investments in developing countries skyrocketed, peaking at an about 43 per cent increase (UNCTAD 2009). However, more revealing than the unexpected turn of events was the way FDI significantly affected, and was affected by the status of the global economy – showing further importance to one type of economic entity that naturally comes with FDI, multinational corporations. This paper will argue that the ever-constantly increasing presence and influence of MNCs prove that they are entitled to be considered as legitimate global political actors. Despite the considerable negative connotation that MNCs have garnered, their undeniable enormity and influence in generating the flow of FDI, their contribution in hastening the distribution of technology and knowledge throughout the globe, and their status as the absolute major player in modernization and globalization through

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