The Impact of Multinational Corporations (MNCs) on Developing Countries

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Multinational enterprises date back to the era of merchant-adventurers, when the Dutch East India Company and the Massachusetts Bay Company traversed the world to extract resources and agricultural products from colonies (Gilpin 278-79). While contemporary multinational corporations (MNCs) do not command the armies and territories their colonial counterparts did, they are nevertheless highly influential actors in today’s increasingly globalized world.
Gilpin discussed the MNC’s evolution through the lenses of a number of business economic theories. Using Raymond Vernon’s Product Cycle Theory, the overseas expansion of American companies until the 1960s was shown as a means of preempting foreign competition and preserving monopoly
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Their influence is apparent when one considers that General Motors’ revenues exceed 148 countries’ respective GDPs (Stiglitz Ch. 7, location 3353). Such economic power inevitably results in both positive and negative aspects.
The domestic political economies of developing countries are positively impacted by the large amount of capital MNCs infuse into the economy, allowing for the creation of physical infrastructure that a developing country might otherwise not be able to afford. MNCs also improve both the quantity and quality of jobs available in a domestic market (Gilpin 303). As a citizen of one such developing country where MNCs are an economic force, I can attest that employment at an MNC such as Unilever and Nestle is aspired to by many in the population, from low-skilled workers looking for factory jobs to business school graduates seeking better-paying management positions. MNCs can also be given credit for helping to bridge the knowledge gap between industrial and developing countries through the transfer of technology and the pooling of research and development resources (Stiglitz Ch. 7, location 3362). In addition to domestic gains, the international political economy also benefits from what Gilpin calls the “paradox of increased scale and increased competition”, which leads to the availability of a larger variety of goods at better quality and lower prices (Gilpin 303).
While the positive aspects of an MNC’s influence
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