Criticism of Multinational Corporations Operating in Developing Countries - Assignment Example

Some critics include the oligopolistic nature of the multinational corporations. MNCs can limit the production, and increase the prices artificially earning high profits. For example, the improper use of baby milk formula by Nestle in some developing countries raised the question of low-quality production. These profits are usually repatriated instead of reinvested locally that can cause hindrance in the host country’s growth. The multinationals are also seen to diminish competition in developing countries.

Besides this, multinational corporations are also seen to intervene in developing countries’ political processes in order to further their corporate interests. For instance, many MNCs have been alleged in the involvement of overpowering Chile’s President Allende. For this, they can use their resources in legal or illegal activities. In this sense, multinationals are not different from local corporations but still have different characteristics that are the basis for criticisms. Multinationals corporations can help in improving the structure of the economy by bringing in foreign direct investments which are a much-needed resource in developing countries.

Technology is brought in the host country because the existing technology might not be efficient for production. In this way, developing countries can have access to better and efficient technologies. Besides economic gains, multinationals can also have a positive impact on the welfare of developing countries. Jobs would increase boosting the national economy and resident income. Increase in income will lead to an increase in tax bases and increased government expenditure. For example, the investment of information technology in India has led to increased income of residents and increased capital expenditures.

Positive impacts of MNCs can help developing countries rise in the world.