what are the disadvantages of multi national companies for agriculture producers
Answers
Answer:
Disadvantages of Multinational Corporations in developing countries
Environmental costs. Multinational companies can outsource parts of the production process to developing economies with weaker environmental legislation. ...
Profit repatriated. ...
Skilled labour. ...
Raw materials. ...
Sweat-shop labour.
Explanation:
Disadvantages of Multinational Corporations in developing countries
Environmental costs. Multinational companies can outsource parts of the production process to developing economies with weaker environmental legislation. For example, there is a trade in rubbish, which gets sent to developing economies like India for disposal and recycling.
Profit repatriated. Although multinationals invest in developing economies, the profit is repatriated to the location of the multinational, so the net capital inflows are less than they seem.
Skilled labour. When undertaking new projects, the multinational may have to employ skilled labour from other economies and not the developing economy. This means best jobs are not received by local workers and the investment is diffused.
Raw materials. A large component of multinational investment in developing economies is seeking out raw materials – oil, diamonds, rubber and precious metals. The extraction of raw materials can cause environmental externalities – polluted rivers, loss of natural landscape. Also, there is only a short-term inflow of money to pay for the materials. In many cases, the payments have not effectively filtered through to the wider population – with money syphoned off by corrupt officials and politicians. Therefore, local communities in developing economies can face widespread disruption, but only limited compensation for the precious materials.
However, it is not all one way. Chinese companies have built new roads and railways in Africa to gain better access to raw materials in Central Africa. This infrastructure investment will leave a long-term legacy – even if firms leave Africa.
Sweat-shop labour. Not all economists are convinced sweat-shop labour is a good thing. Critics argue that weak labour conditions allow multinationals to use their monopsony power and pay lower wages to workers than they should get paid.