Transnational Corporations - Essay Example

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Running head: Transnational Corporations Transnational Corporations-Roles and Impacts Insert Name Insert Grade Course Insert February 29, 2012 Transnational Corporations-Roles and Impacts Introductions The increased globalization that has been realized in the past, accelerated by factors like removed trade barriers, has prompted large organizations to expand their operations across the national boundaries in order to exploit the investment opportunities that may arise in these regions (Center for Study of International Development Strategies, n.d)…
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Transnational Corporations Essay
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"Transnational Corporations"

Download file to see previous pages The transnational corporations have large revenues and can exercise more power than the individual states across which they operate. The companies ‘command enormous financial resources, possess vast technical resources, and they have extensive global reach’ (CSIDS, n.d, p.1). It has been noted that the combined revenue of General Motors and Ford is larger than the total Gross Domestic Product (GDP) for the countries in Sub-Saharan Africa (Ward, 2003). Comparable statistics and facts apply to other giant automobile corporations in the world and the individual economy of certain countries. It then beats logic in the kind of influence that these transnational corporations can have on the regional and global economy. As such, the transnational corporations have significant market power (Ietto-Gillies, 2012). They play significant roles and they have negative and positive impacts on the local, regional, and global development issues. This paper focuses on the roles that the TNCs play in shaping the global economy and the significant impacts that have been observed from the move to go global. The domination of these large corporations in different sector of the world economy is illustrated. The impacts of the TNC Significant developments have been recorded in the foreign direct investments by the transnational corporations since the 1980s with the TNCs taking different forms (Lundan, 2011, p.640). Significant increases have also been observed in the worth of the FDIs. For instance, the total global foreign direct investment in 2002 amounted to about $651bn (CSIDS, n.d). The developed nations are the major home countries for the foreign direct investors and the countries receive much of the proceeds from the investments. Much literature is available that focus on the impacts of TNCs on the home countries (the developed nations) and the literatures conclude that the outflows in Foreign direct investments relates positively with the net productivity in the home country (Sauvant, 2008, p.229). To the developing nations, the foreign direct investments provide the largest source of external finance to the home economy (CSIDS, n.d). Nonetheless, it is still debatable as to whether the transnational corporations help in developing this underdeveloped nations or the corporations are just in pursuit of their interest and do not care about their negative impacts on the society. In as much as the organizations may be considered sources of funds to the recipient nations, it is also worthwhile to note that the organizations are out to seek profits. Efforts to have a state of balance between these two conflicting roles (a profit-seeking organization and source of funds to the recipient country) lead to mixture of negative impacts of the transnational corporations on the national and regional economies. Potential benefits of TNCs One of the positive impacts of the TNCs is that they create employment opportunities in the recipient nations (CSIDS, n.d). Availability of cheap labor is one among the factors that drive a company to go global and establish its FDIs in ...Download file to see next pagesRead More
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