preview

Tnc Research Paper

Good Essays

Globalization has been a process underway for hundreds, if not thousands, of years. From the Roman Empire, to caravans on the Spice Road, to the Transatlantic Slave Trade, the process of connecting the globe in an interdependent web has been underway for a long time. Today, it seems that this process has been quickly accelerated. Since the end of World War II and the rebuilding effort that followed it, global development has increased at an intense rate fueled by transnational corporations, the World Bank, and the International Monetary Fund. These multilateral organizations have transformed our global economy and reshaped our society.

It’s not as if transnational corporations are a new development. Settlement of the Americas and the …show more content…

Supporters of Transnational Corporations (TNC) say that their operation in “third world” country, also known as a “developing country”, benefits both the home country (where the TNC is based) and the host country (where they operate). TNCs construct facilities, make infrastructure improvements, and employ local people, all activities that should improve the economy of a host nation. Many host nations hope that there will be a multiplier effect from the direct investment by a transnational corporation, known as foreign direct investment, or FDI. That multiplier is expected to ripple across all other sectors of their economy – benefitting everyone.

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

Get Access