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.
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.
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