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ROLE OF MULTINATIONAL
CORPORATIONS IN DEVELOPING COUNTRIES
CHAPTER ONE
1.0
INTRODUCTION
A multinational corporation is a company that has
subsidiaries in several countries. Their
decentralized structure, as well as their degree size, often allows them to
overstep governmental constraints which smaller regional or national companies
must observe.
Developing nations attracts multinational subsidiary
operations due to a number factors such as cheap labour, low taxation and less
vigilance concerning workers rights and environmental protection. They are made
to contribute to the social security net (i.e. welfare, unemployment insurance,
e.t.c) other factors including low pay for woman workers, child labour, and the
absence of labour unions, also combine to make the third world ripe for
exploitation. The presence of
multination in these countries improves overall living standards. The benefits of the relationship are most
often one sided, but the economic problems facing these nations makes it
difficult for them to be picky about their investor. Firms become multinational corporations when
they perceive advantages to establishing production and other activities in foreign
locations. Firms globalize their
activities in foreign locations. Firms
globalize their activities both to supply their home country market move
cheaply and to serve foreign markets more directly. Keeping foreign activities within the
corporate structure lets firms avoid cost inherent in arms length dealings with
separated entities while utilizing their own firm specific knowledge such as
advanced production techniques. By
internalizing what would otherwise by cross-boarder transaction multinationals
can bridge the information obstacles that often hinder trade. For example, they may be able to move
carefully monitor product quality or worker conditions in factories they own
than in those of contractors, or adapt the composition of output more quickly
to change in market condition.
Improvements in information technology have reduced the
impediments to exerting corporation control across boarders. These advances have combined in recent years
with an increased openness on the part of government to foreign multination, as
the economic benefits of a foreign presence to the host country have become
more widely recognized. These benefits
include the increased investment and the associated jobs and income that the multinational
firm brings, as well as technological transfer and improved productivity. The role of multinationals in spreading
industry best practices is likely to be especially important services, many of
which are not easily traded across national boundaries.
Evidence of the heightened role of multinationals can be seen
in the quickened pace of Foreign Direct Investment (FDI) in recent years in 1991 FDI flows both in and
out of other European country development (OECD), reached regard level; over
2.5 percent (%) of their combined gross domestic product (GDP) for in flow and
3.0 percent for outflow. Most of foreign
direct investment is between developed countries, since 1982, 75% (percent) of
FDI out flow from OECD countries have gone to other OECD members.
SOURCE: United Nation Multinational Corporation in world
development New York (2000).
1.1 OBJECTIVE OF
THE STUDY
The main objective of this study is to critically look into
the activities of those multinational corporation in their host nations mostly
developing nations if their existence has positive or negative impact on the
development of the host country.
1.2
SIGNIFICANCE OF STUDY
The following were the significance of this study: -
i. It
will be a source of knowledge expansion to me
ii. This
research work will be my contribution to knowledge.
iii. It
will serve as source of data for others who may carryout research work on some
or related topic in the future.
iv. It
will also serve as point of reference to policy makers in their relationship
with matter concerning multinationals.
v. This
research work will be a companion to decision makers on foreign investment in
the country. Mostly when the fire of
foreign investment is at higher level in the country.
1.3 SCOPE OF
THE STUDY
The essay work will cover the following areas of study in
terms of the activities of multinational corporation, their roles as an agent
of the development, their contribution towards development, the prose and coin
i.e. advantage and disadvantages of their activities. It will also examine their negativity in the
area of profit send to their home ration.
1.4
LIMITATION
Due to the following constraints such as inadequate books or
the topic posed a serious constraint on the write up some of the date needed
for this write-up are not available at the time this write up services carious
out.
It is prominent to note that no one has every thing to
himself. In everything, there arises
some constraints, so it is in the case of this essay
i.
Financial problem; This problem
is a great one especially in this present day economy recess in with inflation,
sky rocketed prices of materials, where people are struggling to live within
their limited resources. This is
especially applicable to a student who depends largely on others, among lost is
that of transportation to and fro, the place of research, in some cases would
have to trek for long distance.
Time: Time factor is
another constraint, which the writer encountered. Such as combining class activities i.e. test,
assignments, lectures and exams with the project work other include the
drudging of read and writing from one item to another in the attempt to
accomplish the task
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