AN EVALUATION OF THE ROLE OF MULTINATIONAL CORPORATIONS TOWARDS ECONOMIC GROWTH IN NIGERIA (A CASE STUDY OF NIGERIA BOTTLING COMPANY PLC
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AN
EVALUATION OF THE ROLE OF MULTINATIONAL CORPORATIONS TOWARDS ECONOMIC GROWTH IN
NIGERIA (A CASE STUDY OF NIGERIA BOTTLING COMPANY PLC
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Over the
years, Multinational corporations (MNCs) have been a source of controversy ever
since the East India Company developed the British taste for tea and a Chinese
taste for opium (Stopford, 1998). A typical multinational corporation (MNC)
normally functions with a headquarters that is based in one country, while
other facilities are based in locations in other countries. In some circles, a
multinational corporation is referred to as a multinational enterprise (MNE) or
a transnational corporation (TNC) (Tatum, 2010). They enter host countries in
different ways and different strategies. Some enter by exporting their products
to test the market and to find whether their existing products can gain
sizeable market share. For such firms, they rely on export agents. These
foreign sales branches or assembly operations are established to save transport
costs because there is a limit to what foreign exports can achieve for a firm
owing mainly to tariff barriers and quotas and also owing to logistics or cost
of transportation. Most of the firms are encouraged by the low wage rates and
other environmental factors. To meet the growing demands in the foreign
countries, the firm considers other options such as licensing or foreign direct
investment which are critical steps. Some continue with export even when they
have settled for the foreign direct investment option. Every step takes
strategic planning and is motivated by profit through sales growth. The idea of
multinational corporations has been around for centuries but in the second half
of the twentieth century multinational corporations have become very important
enterprises. Tatum (2010) proposes that multinationals operate in different
structural models. The first and common model is for the multinational corporation
positioning its executive headquarters in one nation, while production
facilities are located in one or more other countries. This model often allows
the company to take advantage of benefits of incorporating in a given locality,
while also being able to produce goods and services in areas where the cost of
production is lower (Ozoigbo and Chukuezi, 2011). The second structural model
is for a multinational corporation to base the parent company in one nation and
operate subsidiaries in other countries around the world. With this model, just
about all the functions of the parent are based in the country of origin. The
subsidiaries more or less function independently, outside of a few basic ties
to the parent. A third approach to the setup of an multinational corporation
involves the establishment of a headquarters in one country that oversees a
diverse conglomeration that stretches to many different countries and
industries (Tatum 2010; Robinson 1979). With this model, the multinational
corporation includes affiliates, subsidiaries and possibly even some facilities
that report directly to the headquarters. Such direct investment means the
extension of the managerial control across national boundaries (Gilpin, 1987).
While institutions are important for economic development, particularly in
resource rich countries, the interaction between multinational corporations and
host country institutions is not well understood (Wiig and Kolstad, 2010).
There is a risk that multinational corporations facilitate patronage problems
in resource rich countries, exacerbating the resource curse. Multinational
corporations (MNCs) in service industries have given this sector's large and
growing impact on the global economy (Goerzen and Makino, 2007). The Marxists
view the emergence of the multinational corporations as a historically
progressive aspect of capitalism in the process of developing, at international
level (Gilpin 1987; Stopford 1988). In all these views both Marxist and
non-Marxist, the common basis is productive activity in more than one social
formation. Another point to be noted right away is that in a social formation
there may be many multinationals with different nationalities and also many
corporations of the same nationality. In a social formation where there are
many multinational corporations from different nations, there are higher
possibilities of conflicts than where they are mainly from the same country.
Activities of the multinational corporations in Nigeria have generated a
repulsive reaction from many economic theorists like (Onimode 1982).
Onimode(1982) went ahead to regard multinational corporations as monsters that
have consistently and systematically stultified economic development in various
parts of the world. The merits of the multinational corporations in Nigeria,
the consequences of economic exploitation of multinational corporations in
Nigeria and suggested ways for restitution will be discussed in this study
while examining their role towards economic development in Nigeria.
1.2 STATEMENT OF THE PROBLEM
Most of the
multinational corporations operate by seeking and securing the opportunity for
environment that has least cost of production of goods for world markets. This
goal may be achieved through acquiring the most efficient locations for production
facilities or obtaining taxation concession from host governments. This has
been looked upon by many has counterproductive to the host country. Though
multinational corporations have contributed in terms of job creation but many
of the employees of most Multinational Corporation are poor remunerated.
However, the researcher is evaluating the role of multinational corporations
towards economic growth of Nigeria.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To examine the role of multinational
corporations towards economic growth of Nigeria.
2. To identify the factors determining the
growth and success of multinational corporation in Nigeria.
3. To examine the demerits of multinational
corporation to their host country.
1.4 RESEARCH QUESTIONS
1. What is the role of multinational
corporations towards economic growth of Nigeria?
2. What are the factors determining the growth
and success of multinational corporation in Nigeria?
3. What are the demerits of multinational
corporation to their host country?
1.5 HYPOTHESIS
HO:
Multinational Corporations has not contributed to economic growth in Nigeria.
HA:
Multinational Corporations has contributed to economic growth in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of this study:
1. The outcome of this study will be useful to
government of Nigeria and the general public on the role of multinational
corporation in the economic growth in Nigeria.
2. This research will also serve as a resource
base to other scholars and researchers interested in carrying out further
research in this field subsequently, if applied will go to an extent to provide
new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study
on the role of multinational corporations towards economic growth of Nigeria
will cover how the multinational corporation has affected the economy of Nigeria.
LIMITATION
OF STUDY
1. Financial constraint- Insufficient fund tends
to impede the efficiency of the researcher in sourcing for the relevant
materials, literature or information and in the process of data collection
(internet, questionnaire and interview).
2. Time constraint- The researcher will
simultaneously engage in this study with other academic work. This consequently
will cut down on the time devoted for the research work.
REFERENCES
Gilpin, M.
E. (2001). The Nigerian economy (A selected study). Jos: Macedonia Trust
International.
Goerzen, A.
& Makino,S .(2007) – “Multinational corporation internationalization in the
service sector: a study of Japanese trading companies”, Journal of International
Business Studies (2007) 38, 1149–1169
Onimode, B.
(1982). Imperialism and underdevelopment in Nigeria: the dialectics of mass
poverty, London: Zed Press; Westport, Conn., U.S.A.: U.S. distributor, L. Hill,
1982. ii, p. 258
Ozoigbo,B.I,
& Chukuezi,C.O(2011). “The Impact of Multinational Corporations on the
Nigerian Economy”. European Journal of Social Sciences – Volume 19, Number3
Robinson, J.
(1979 ed.) .The International Division of labour and Multinational Companies,
London, Saxon House, Teakfield Ltd, p. 51
Stopford, J.
(1998). Multinational corporations, Foreign Policy, Winter 1998 i113 p12(1)
Tatum, M.
(2010). “The Activities of Multinational”. Retrieved from:
www.wisegeek.com/what-is-a-multinational corporation.htm
Wiig, A
& Kolstad,I. (2010). “Multinational corporations and host country
institutions: A case study of CSR activities in Angola”, International Business
Review vol. 19 no. 2 pp. 178-190
CHAPTER TWO
LITERATURE
REVIEW
2.1
INTRODUCTION
This chapter
gives an insight into various studies conducted by outstanding researchers, as
well as explained terminologies with regards to the role of Multinational
Corporations towards economic growth in NIgeria. The chapter also gives a
resume of the history and present status of the problem delineated by a concise
review of previous studies into closely related problems.
2.2 THE
CONCEPT OF MULTINATIONAL COMPANY
A
multinational corporation is a company that has subsidiaries in several
countries. Their decentralized structure
as well as their sheers size, often allow them to work without government
constraints which small regional or national companies must companies must
observe.
Developing
nations attract multinational subsidiary operations due to a number of actors
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 fact, including
low pay for woman workers, child labour and the absence of labour unions, also
combine to make the developing nations ripe for prospect the presence of
multinational in these countries improves overall standards of living. The benefits of the relationship may be
one-sided, but the economic problems facing these nations makes it difficult
for them to be picky about their investors.
Firms become
multinational corporation when they perceive advantages to establishing product
and other activities in foreign locations.
Firm globalize their activities both o supply their home-country market
more cheaply and to serve foreign markets more directly-keeping foreign
activities with corporate structure lets firm avoid the costs inherent in arms
length dealings with separate entities while utilizing their own firm specific
knowledge such as advanced production techniques. By internalizing what would otherwise be
cross-boarder transactions, 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 the changes in market conditions. Improvements information technology have
reduced the impediments to exerting corporate control across boarder. These advances have combined in recent years
with an increased openness on the part of government to foreign multinational
as the economic benefits of 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
firms brings, as well as technological transfer and improved productivity. The
role of multinationals in spreading industry best practice is likely to be
especially important in 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 (FBI) in recent years. In 1999 FDI flow both in and out of OECD
countries reached record levels. Over
2.5 percent of their combined GDP for inflows and 3.0 percent for outflows. Most FDI is between developed countries. Since 1982, 75 percent of FDI outflows from
OECD countries have gone to other members.
2.3 HISTORY
OF THE MULTINATIONAL CORPORATION
The opening
of world trade 700Ad – 1600. The most
basic foundation of multinational corporation is trade between tribes, among
regions, or across established political
boundaries. Although accounts of the
barter of goods or services among different people can be traced back almost as
far as the record of human history, the opening of major global economic
connections can be considered; the first prerequisite for modern globalization
multinational corporation.
By about
100AD, it was possible, if sometimes dangerous and difficult, for merchant and
travelers to traverse the “known” world from England to China and Japan. These trade route were the first global links
by which raw materials, food and luxury goods became available for their
original by the 1600, the Portuguese and Spanish had opened sea route which
spanned the globe. Below I will like to
briefly and partially select some major trading routes and system.
THE ROMAN
TRADE ROUTES
From around
50BC to 500AD the Roman empire controlled the are surrounding the
Mediterranean. A single currency, the
famous network of Roman Road and dozens of naval harbor i.e. the connected with
the navy protection enabled transport and trade on a large scale within
empire. Areas with crop failures
received grains, frontier towns were supplied, and the staples of Roman life
(wine, olive oil, art, glass and weapons) were available throughout the
empire. The Roman also developed the sea
route from Egypt to India, through which luxury goods were imported from the
east. Spices, luxury hoods like teak, silk, porcelain and pearls came from India
and China. Trade with the Northern
African interior, conducted through Aden, was in Ivory, rhinoceros horn and
hides, tortoise – shell and slaves. Rome
paid for these luxuries in gold and silver in such amounts that there was a
large drain of hard currency out of the empire.
AFRICAN
TRADE ROUTES
By 1000AD
northern Africa and especially the great ancient Egyptian civilization had
already entered into large scale trade with Europe and Asia, and Islam
dominated most of northern Africa.
Although primitive trans-sahara trade routes had always existed,
sub-saharan Africa was still almost completely isolated form the rest of the
world. By 1500AD, a number of African
kingdoms were well developed, centered around the Sudan, the Niger and Congo
River, Zimbabwe, and the Horn of Africa Trade in iron copper, cattle and other
goods between these states, especially between coastal and central states was
well established. Trans-saharan trade in
salt, slaves, hores and other goods reinforced the spread of Islam, which
arrived in tropical Africa. The east
coast of Africa was past of the Indian ocean trading network for Ivory Pottery,
animals skins, and gold, and Arab traders settled a number of new town.
THE VIKINGS
While
commonly considered, only as raiders and plunderers, another view of the
Vikings maintains that their liberation and redistribution of wealth from kings
and churches stimulated economic development from key to Dublin and that
trading was as important as pillaging for Vikings living abroad. Around 1000AD Dublin and that trading was as
important center for Viking trade. The
ships coming in would carry wine and ceramics from England, silk from Baglidad,
broken glass from Germany to make beads with silver from the middle east and
wairus Ivory from arctic regions. The
Viking settle Iceland and greenland, and had early short lived settlements on
new found land, Canada, and perhaps father south. Norse artifacts found in Northern Canada
indicate that the Vikings traded with native Americans. It has been postulated that these trading
relationship existed for centuries.
2.4
MULTINATIONAL CORPORATION IN THE DEVELOPING COUNTRIES
Like all raw
materials producing states the developing countries (DC’s are attractive to
foreign investors with their economic and social status and most of them are
their world nations. The outlook of
their economy in terms of cheap labour and natural resources makes the
multinationals rough to such countries.
Nigeria as
one of the DC’s was a colonial state under British control, domination and
exploitation. At a political
independence in 1960, Nigeria emerged as a neo-colonial state. Although the country is no longer a colony;
its economic, political, social and educational institutions are structured
along western capitalist model. The
Nigerian political economy is subject to imperialist control of the western world
and it is integrated into the international capitalist economic system, which
served the interest of the international capitalist economics the Nigerian
economy is by visualizing it in terms of the relationship between the output of
the various sector of the economy such as industrial (which shall be the major
concern of this research project as it is being affected by foreign investment
in the country). Agricultural, mining
and quarrying, distributive, building and construction sectors.
The
structure of the Nigerian economy can therefore be conceived in its
neo-colonial capitalist nature in which the clientele class of the national
bourgeoisie and compradors exercise dominant influence on the economic life and
activities of majority of Nigerians. They
do such through the state, relations with the western bourgeoisie and
activities of the multinational corporations (MNC), which dominate major
sectors of the economy.
The mining
and quarrying sector is one of the sectors where the forces of imperialism are
dominant. The domination of this sector
by where the foreign business interests is highly pronounced. The discovery of oil as the major foreign
exchange earner in the 70’s attracted mining multinational companies to expand
the scope of their oil exploration and exploitation in this part of the world
multinational oil companies such as Agip, mobil, EIF, Ashland e.t.c. have
dominated. The exploration and
exploitation of petroleum resources in Nigeria.
These foreign companies posses technology to engage in such operation
efficiently. This had led to the
dependence of the advanced capitalist states.
The
manufacturing and crafts is also dominated by the multinationals. The share of manufacturing investments out of
these huge foreign investments was relatively large.
In 1966 for
instance, foreign investors in manufacturing sector controlled 92.5% by
Nigerians. (National Institute for International affairs, 19870 in 1970 ,
foreign investment controlled 57.3% while Nigerians controlled 42.7% and in
1976 also foreign domination continued even after the indigenization decree had
been promulgated the controlled 56.7% as against 43.3% controlled by
Nationals. Most of the multinationals;
UAC, Lonrho, Unilever groups – controlling this sector rely heavily on foreign
input for it survival. The manufacturing
industries import almost all the need in order to be in production (O. Onido,
NIIA 1987)
Multinational
corporations have grow in dramatically in size and influence in the expanding
economy. Consequently, multinational
corporation have become the object of considerable discussion and animosity
R.J.Barnet and R.E. Muller (1974) referred wearily to the global term
“commodore to suggest those entities increasing power in the international
area, R. Gilpin (1995) has attributed U.S power to the multination
corporations; D.H. Blake and Walters (1987) ask the often posed question
whether multinational corporations is a growth or under development for the
host countries, and Sampson 91975) has exposed the oligopolisic aspiration of
the major oil companies known as the seven sisters. Operating at times with resources that often
exceed the GNP of its host country and uncertain industries (notably oil)
participating in the cartels designed to control prices and production
internationally the multinational corporation is both a source of capital
investment and a threat to the nation-state.
The
multinational corporations according to marx rose because of the rise of a new
age of capitalism which lowing called “imperialism” the highest stage of
capitalism. The multinational
corporation that arose represented a more developed state on the concentration
of production and circulation of both goods and capital. The multinational corporations took the firm
of direct investment, which related portfolio investment. In 1914, 90% in all international capital
movements took the form of portfolio investment by individuals and financial
oligarchies, now 75% of capital outflow are in the firm of direct investment
entailing of ventures (D. Nabudere, 1977).
Some workers
have drawn parallels between the new multinational corporations and earlier
mercantilist internationals these, which are medici of Florence, genoa and
Venic in the 13th century, he gross Regensburg sells chaft in the 15th century,
Germany and fuggersin Augsburg, were family business in two countries under the
vary different condition of feudalist Europe.
The multinational corporations of today are really a new phase
international business organizations which can only be properly understood in
the context of the development of the capitalist system (D. Nabudere 1977).
Historically,
the United State has been the home country for the largest proportion of parent
companies, followed by Britain and West Germany furthermore, although the
growth of multinational corporation is a global phenomenon, if the magnitude of foreign direct investment
is used to measure their global reach, it is parent that the major part of all
transaction at business is located in the developed areas making up the first
world. Practically, foreign direct
investment originated in developed market economics, which also absorb more
than three quarters of all investment flows (commission of transactional
corporation, 1985 – 6). The developing
countries share of foreign direct investment grew in the 1970’s but it
plummeted during the debt crisis of the 1980’s (center of transnational
corporations 1986).
Another
development in the global pattern of foreign direct investment is the emergence
of Japan as a major home country. The
outflow of Japanese foreign direct investment increase nearly four fold between
1975 and 1985, moving from $3.3 billion to $12.2 billion during that period
(center on transnational corporations, 1987 – 9).
The growing
number and economic power of multinational corporations contribute to the
controversy surrounding their impact. It
has been estimated that in the early 1980’s, about either thousand
multinational corporations world wide controlled assets in two or more
countries and that these corporations were responsible for making roughly about
four-fifths of the world’s trade (excluding that of the centrally planned
economics). Between 1960 and 1980 the
revenues of the top two hundred multinationals firms escalated as their combined
share of the world’s gross domestic product (GDP) increased form 18 to 29
present (claim Monte and Cavanaugh 1982; 149, 152, 155). The main characteristics identifying the
multinational corporations are its central direction. The plan is draw up at the headquarters and
the activities of the subsidiary are tightly integrated with each other. the availability of goods, international
communications, air service, telephone, tele-printer and telex services as
computers become vital to the multinational corporations most multinational
corporations are open about their movies.
The point out that co-operations go transnational to preserve and expand
market in areas protected by tease barriers, to provide consumers with the
produced in the home country, to take advantage of economic séance and comparatively
actively lower prices than export, to search for raw materials and cheep labour
if this will contribute to general efficiency and obtain knowledge cheaply by
calling on local enterprises.
The
multinational corporations must however, always seek to obtain profits greater
than average profits. In order for a
country to go over seas, it must be in a position to make higher profits there
than it can in the domestic market. This
is the central motive for the multinational corporation rotations which
determines the artesian for its investments decision.
It is
generally fine to say that most multinational corporation make a general survey
on the size of the market, investment climate cost (production, transportation
and resource factors) profitability, payback, period and the average rate of
return before investing in particular economy.
As far as the market is concerned, the corporation will try to determine
the present and protective growth of demand and their share to this
market. They would negatively consider
whether they could attain sufficient scales for economic production and a
satisfactory level of profit. To help
them come to such conclusion, they will analyze a country’s gross national
product (GNP) and GDP population and its distribution, industrial production of
specific sectors of the industry and levels and trends in consumption, imports
to determine the investment climate, the corporation will analyze the impact of
various factors such as receptivity and special incentives to foreign investors,
including tax concession and low interest loans, whether there are laws
restricting the repatriation of earning, high tariffs, import and exchange
restriction e.g. D. Nabudere (1977) high tariffs and import restrictions as
already pointed out, may attracts investors as they help to establish a local
plant. They analysis of transport costs,
taxes, production costs of production factors such as wages and rent will help
the company determine whether it is worthwhile investing.
multinational
corporation have some advantages over states in the approaching play of social
forces leading to a new system of world order for the first time in history,
managerial skills and technology make the management of the globe as a
integrate. Unit of growing possibility
its purpose include transnational effort to adapt corporate capitalism to
changing economic and political forces to ensure capitalisms future in
non-territorially oriented economy facing possible conflicts with territorially
based national government disposed classes (Talk 1990). Multinational corporation place less emphasis
on the interest of one state in the system or the will being of its domestic
population than national governments.
Despite the technologies possessed by the advance economies, the
multinational corporation presence in third world economies only creates
technological dependence in Nigeria for instance, despite apparently favourable
capital flows, information available indicates that far from having a net positive
effect on capital accumulation, multinational corporations have tended to
promote the recapitalization of the host economies. Also, despite the apparent net inflows in the
years 1971 – 77 the picture may be different if the covert transfers such as
result from price manipulation, payment for second hand of ………… equipments and
machines reconditioned and presented as new, and fraudulent transfer such as
occurred with the Johnson Matthew Bank (JMB) involving multi-billion Naira
fraud as well as many other cases revealed by specials set us since the Buhari
Administration over in voicing sale of Naira in western markets at a very low
rates are taken into account (Nig. Inst for inter affairs 1989).
It has been
maintained that the major interest of these Nigerian share holders, directors,
managers, properly owners, transporters, dealers, layers, accountants, and
contractors is to make as much as money as possible an keep most of them aboard
in the countries of these multinationals.
It is also important to indicate the sectors in which the foreign direct
investment has tended to contract in order to establish their pervasive impact
on the political economy. Cumulative
investment in the manufacturing and processing sector increase form N06.2
million in 1975 to N550.7 million 1976 and N703.8 million in 1977. Evidence exists to show that claim that they
are agents of industrialization and technological development can be amply
faulted following the policy of import substitution instituted during the
colonial period, when there was a marked absence or a viable industrial and
technological base, the post independence era had witnessed no major break
through in technology being dominated by low technology light industries. The dependence, which is move acute in the high
intensive technology sector like oil and iron and steel, is replicated by and
large in the other industrial sectors including the construction of automobiles
sectors where imparted inputs constitute from 60 – 80% of inputs under the
circumstances it is not surprising that the auto injuries in which local
participation has gone up to 60% are able to hold the Nigeria government to
ransom by frequently excessive increases in prizes, shutdown and
resentments. Despite the involvement of
the multinational corporations ion these sector, Nigeria remains
technologically under developed. The
blame however blame cannot be placed solely on the Nigerian state and the
ruling class, which by various accommodative policies have encouraged this
pattern of development under development since independence. They have done so by promoting the illusion
that multinational corporation are interested in developing the technological
capacity of Nigerians and by offering them incentives fiscal and other forms of
protection, which encouraged in efficient local resources, lack of seriousness
in implementing the expatriate quota system which is apparently intended to
stimulate local training progressive replacement of expatriates by Nigeria by a
series of policies and legislation which emphasize transfer rather than local
development of technology (NAII, 1989).
More importantly, the list of directors and shareholders in joint
ventures in which the multinational corporations control is a list of retired
generals, permanent secretaries to government functionaries, traditional rulers
all of whom are strategically located in the power structure or have
substantial influence in government policies or access to decision makers. Allies of foreign capital, these petty
bourgeoisies serve the interest since despite independence the center for
deliberation still lies outside. They as
client of the state and the multinational corporations, from the third arm of
the new colonial triangle and are not in a position to quantitatively shape the
political economy (NIIA,1989).
The
multinational corporation expansion could not have occurred on the scale
achieved without the financial contribution of the world’s international
banks. Indeed, the transnational bank
(TBN) has itself also become a major actor and price in the global political
economy. In 1985, the combined assets of
the world’s twenty five largest banks has grown to $2.6 trillion a figure
nearly triple the combined sales of the twenty five largest industrial
firms. Reflecting trends elsewhere in
the transforming global economy, 1985 five of the ten largest banks were
Japanese, whereas in 1987 only one of the ten largest banks was Japanese
(center in transnational corporation, 1987 –40).
Regulating
the activities of multinational corporations in the third world countries quite
differs from that of the industrialized states.
Host government in industrialized state are frequently more concerned
about the integration of foreign owned branch plants into the domestic economy
than they are about their location.
Multinational corporations, which make substantial domestic sales
involving a significant import, content, notable in high technology sectors;
can create adverse balance of payment effects.
In so far as branch plant rely on flows of in-house good and services
provided by the corporate parent, they create fewer demand for output of local
firms (Britton, 1976) and generate employment characterized by a truncated
occupational profile, one which lack serious managerial position on research and
development (RSD) functions (Hayter, 1982).
Nations such
as the United kingdom and France are in a stronger position to exert pressure
on multinational corporations to organize their business in ways which promote
national interests that are nations in the third world, which face similar
problems. The allocation of public
sector spending is itself a powerful instrument to encourage desired pattern of
behaviour. The organization of IBM in
western Europe represents on response to demands that if act as a good
corporate citizen, albeit at the loss of some efficiency. Production plant are so located that value
added in given country is in fair proportion to JBM sales come from states
where there some effort is made to ensure that bought import come from states
where there is no direct manufacturing (the economist, 29 October 1977, pg 2).
2.5 THE EFFECT OF MULTINATIONAL ON THE
INVESTING COUNTRY
The time
perspective plays an important role for the balance of payments of the
investing country’s. If the investment
in the country is given 21.4 one injection, it would take six years for it to
pay off, in the sense that the balance of payments of the investing country
would again be positive. If the direct
investment, instead, consisted of a steady flow of $100 million per years, it
would take eleven years to reach equilibrium, if the flow of direct investment
increased by 22 percent per year, it would never pay off.
In the long
run, direct investment ought to have a positive effect on the investing country’s
balance of payments. This is especially
the case if the flow of direct investment is steady. We can see this effect today on investment
from the United State and some other developed countries in their dealings with
several developing countries (DC’s). If
the flow sharply increases, there could be marked adverse effects on the
balance of payments. Direct investments
undoubtedly strained the United State external position in the late 1950’s and
1960’s.
Other
problems that could arise are more concerned with real factor with the
increasing of nay single own independent economic policy become
circumscribed. Corporations could gather
in one country to work out pricing and market arrangements for another country. As long as there is no international legislation
concerning taxes, restrictive business practices, e.t.c. any single country
will difficulties in efficiently implementing its own law.
Earning on
us direct investment aboard (percentages of book value at the beginning of the
year).
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instructions and information if you will like to order/buy our complete written
material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount
(#5,000) into our bank Account below, send the following information to
08068231953 or 08168759420
(1) Your project
topics
(2) Email
Address
(3) Payment
Name
(4) Teller Number
We will send your material(s) after
we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE
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