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ROLE OF
MULTINATIONAL CORPORATIONS IN DEVELOPING COUNTRIES
ABSTRACT
This is the fact that under proper
management of economic policies, multinational corporations are the bed rock
for developing countries and national integration as it provide greater
opportunities by exploration and discovery of our major mineral resources were
made possible by the MNCS(Multinational Corporations). And also, our major transport networks were
mostly developed by the corporations which provides development in many
countries.
Unfortunately,
this corporation can’t play this expected role largely due to financial
problem. Multinational corporation
concentrated in boosting agricultural product which form the ed rock of most
developing countries economy. Therefore,
financial constraint serves negative attention from multinationals.
With this, I
decide to write the extended essay title (The role of multinational
corporations in developing countries).
To explore various positive aspect of development.
Chapter one of
this extended essay deals with the introduction of the subject matter,
objective, significant, scope and limitation, and definition of the
terminologies.
In chapter
two, some related literature review on multination corporation were review,
some definition of multinational corporations, effect of multinational corporation
on the investing country. The role of multinational development,
creating avenue for direct investment, the effect on the host country and
positive and negative aspect of multination corporation were review.
Chapter three deal with summary, conclusion
and recommendation.
TABLE OF CONTENTS
Cover - - - - - - - - - - - i
Title - - - - - - - - - - - - ii
Approval - - - - - - - - - - - iii
Dedication- - - - - - - - - - - iv
Acknowledgement- - - - - - - - - v
Abstract- - - - - - - - - - - vii
CHAPTER ONE
1.0
Introduction- - - - - - - - - 1
1.1 Objective of the study- - - - - - - - 3
1.2
Significant of the study- - - - - - - - 4
1.3
Scope of the study- - - - - - - - 4
1.4
Limitation - - - - - - - - - - 5
CHAPTER TWO – Literature Review
2.0
Introduction - - - - - - - - - 6
2.1 Definition of multinational Corporation- - - - - 25
2.2
The Effect of multinational on the investing country- - - 25
2.3
The Effect of Host Country - - - - - - 27
2.4
Creating avenue for direct investment- - - - - 29
2.5
Positive Contribution of MNCS to the Nigerian economy - - 30
2.6
Negative Aspects of the Activities of MNCS of the Nigerian
Economy- - - - - - - - - - 34
2.7
Needs for Government Control of Multinationals; - - - - 41
CHAPTER THREE -Summary,
Conclusion and Recommendations
3.1 Summary- - - - - - - - - - 46
3.2
Conclusion- - - - - - - - - - 47
3.3
Recommendations- - - - - - - - 47
Bibliography- - - - - - - - - 49
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.
ii.
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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