write an essay on the impact of multinational corporations in industrial development
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The word “Multinational” is a combined word of “Multi” and “National”, which when combined refers to numerous countries. A Multinational Corporation is a corporation that has its facilities and other valuable assets in at least one country, which is other than its parent country. It is a organization or company that both produces and sells services and goods in a multitude of countries. Some MNCs have a budget which is greater than some small sized countries GDP’s. [1]
Some of the major examples of MNCs today are Nokia, McDonalds, Microsoft, Exon Mobile and BP.
One of the initial MNCs was the East India Company (1600 – 1874), which is an excellent examples of both the benefits and drawbacks of such ventures. On one hand there existed a dynamic profit making entity, on the other existed a company operating on foreign soil, under very little control of the British government, having, operating and running their own private armies, utilizing military power and ultimately taking over administrative functions of India.
MNCs have come a long way since then and have seen a sharp increase in the past few decades. The numbers of active MNCs went from being roughly 7,000 in the 1970’s to 78,000 in 2006, being responsible for over half the global industrial output. [2]
Multinational corporations usually bring with them foreign direct investment, which is direct investment in a country by the company for expanding their existing business base or for buying of raw goods and inputs from them.
Multinational corporations were the vital factor in globalization, where local and national governments competed against each other in order to incentives and attract more MNCs and ultimately, investment in their countries. An example of such incentive is the Free Trade Zones, where goods may be manufactured, handled, landed or even exported without any intervention of the local custom authorities. Most of these free trade zones exist in developing countries such as Pakistan, Mexico, Sri Lanka, Madagascar, Brazil and India, as they are eager to attract more foreign investors.
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