Topic: MNCs and it’s impact on developing countries. - page 2. (Read 411 times)

I guess these social responsibilities done by the multinational corporations in its host country could be classified as an advantage. It think I briefly mentioned it in the original post when I talked about growth.

These corporations help with infrastructural development amongst others as part of its social responsibilities. In my opinion, these social responsibilities aren’t mandatory but are done to win the goodwill of the local populace and enable them conduct business smoothly.

Multi-national companies use developing countries as their base ground for manufacturers or we can say for labor forces. Cheap labor, cheap land, and cost-effective transportation are some key points that make developing countries a hot cake for multinational companies. All the telecom companies in Bangladesh are owned by foreign companies. 

It is good that you mentioned this and it is important to note it that corporations or multinationals exploit the host countries resources for the advantage of parent company in their home and as you mentioned again in your last paragraph that they are not charity organizations, this means that no matter how it is painted that they recruit locals (which sometimes are underpaid), their sole aim is profit taking because they are not charitable but profit oriented.

However, there is something that is suppose to be the responsibility of these multinationals that I have not seen in your list and that is that they are suppose to perform some social responsibilities to the host countries which is apart from employment of locals. So I don't know if this should fall under advantages.

Multinationals corporations are suppose to perform social responsibilities to host countries that they exploit their resources and degrade there environment. The first reference is Nigeria where her Naija Delta have been badly degraded by the oil companies, excavating, rig and drilling activities that have changed the suppose natural blessing to gnashing of teeth because of the neglect through the Nigerian government. The region that is laying the "golden egg" for country have been neglected and this has caused droughts and food insecurity because their soil have all been bastardised because of oil drilling activities . The soil degradation that has caused them their agricultural products losses is not only the challenge there, their waters also have been polluted because of the oil drilling activities and acquatic lives is suffering as the people are predominantly farmers and fisher men, they also suffer regular floods.

Consequently, the oil companies or multinationals should do well to be perform their MOU with the communities of their hosts and perform social responsibilities to communities where they are like build good road networks, award scholarship to the youths, clear up oil mess in the region, support them in aspect of need since they have taken away their environment with them, employment is not enough.

There's a drawback yo both that hasn't been mentioned here which is the money that's also taken away from the local economy and the country. A company generally moves into somewhere because it intends to make a profit (some just do it for exposure and market share too but mostly it's about profit). These companies then find ways to avoid paying taxes on these profits by exporting them to another country with 0% or low tax rates. If the government of a country then tries to recoup this loss by adding licensing fees or other fees (such as import tax) they'll risk losing further investments from larger companies (and this is problematic if there aren't many companies wanting to invest to begin with).

MNC: Multinational corporations.

Multinational corporations can be said to be a business organization that deals and operate in two or more countries; having its headquarters mainly in its home country.
Simply put, it’s a business that operates and has offices in more than one country.

What makes a corporation multinational?
It must have operations and should maintain offices and assets in countries other than it’s home country.

These are some features of a multinational corporations;
1. They operate and conduct business internationally and keeps branches in other countries
2. They have and keep huge and large assets; both physical and financial
3. It must have a coordinated network of branches
4. The parent company should have indirect control on the activities of the branches
5. Being a large corporation, they’ve got access to new and top notch technology
6. They employ the best trained managers with the right skill best suited for the job

It’s impact on developing countries.

Multinational corporation would argue that with their presence in developing countries, they’re actively enabling investment opportunities and economic development in these countries hereby greatly creating employment opportunities.
There are merits and demerits of MNCs opening shop in a developing country. Here are some;

Merits
1. Employment opportunities: This is an undeniable fact that MNCs bring with them job employment for the host country, employing about 70% of its workforce from the local populace

2. New tech, ideas and innovation: Being a large and already established corporation, thy would have the best of technology and new innovations that they would bring and ultimately pass down to smaller local businesses

3. Growth: With its massive investments that would include infrastructure development among others, the host country would grow economically.

Demerits
1. Exploitation of cheap labor: MNCs, being attracted by the cheap labor they could get at the developing country make sure to exploit the Human Resources and pay little wages.

2. Pollution to the environment: MNCs discard their waste materials improperly, polluting the environment. Without the regulations and/enforcement on proper waste management, MNCs mostly get a pass or the government turns a blind eye to the pollution and improper waste management practices employed by the MNCs.

3. Threat to local small businesses: MNCs, being large and already established is a viable threat to small businesses as they’ve got the capital and assets. And if unchecked, they could monopolize the economy and ruin other small and upcoming businesses.

4. Exploitation of natural resources: These large corporations massively exploit both human and natural resources as most of the profit generated from doing business in the host country goes directly back to the parent country

5. It can get difficult for a healthy competition as small business obviously can’t compete and overtime, dependency on the goods produced and services rendered by the  MNCs would grow leaving no room for small local businesses.


Whatever perks multinational corporations bring to its host country, we shouldn’t forget in a hurry that these corporations aren’t a charitable organization, with its primary aim is profit making and returns to its shareholders.
With grants and/low tax rates given by the host government to attract these corporations, coupled with the idea of low wages and a higher profit motive, these corporations wouldn’t be there if they thought they couldn’t make profit.