Multinational Corporations in Third World Countries - Essay Example

Globalization is a phenomenon where the world is increasingly becoming integrated socially, economically and politically. These is mainly due to advancements in information communication technology( ICT), improvement in transport infrastructure, expedite mass migration and movement of people as well as the trade in goods and services leading to an increased economic activity that has surpassed national markets necessitating the need to exploit markets outside the borders (Jan A S, 2000). Increased technological advancement, liberalized world markets and intense competition has resulted to increased globalization.

Third world countries is a term that refers to the least developed countries of the south which includes countries found in Asia, Africa, Latin America Oceania and the Caribbean. The term came about after world war two where the bourgeoisie regimes of the west were referred to as the west while the antagonistic regimes of the orient were referred to as the East and were socialist. The newly independent countries of the south coined the term third world to signify their non aligned disposition.

These countries are generally characterized by low levels of investments, rampant poverty and diseases, high illiteracy levels, poor infrastructure, political instability, poor governance where the ruling elites are wealthy (comprador bourgeoisie) coupled with high birth rate with low economic growth rate (Breda P, 1983). Other features include distorted and highly dependent economies(dependency) on aid, grants and technical assistance, a key feature that is furthered by the actions of the MNC'S and global institutions like the world bank and the International Monetary Fund(IMF).

These economies generally produce primary goods that are exported to the west for value addition while they act as markets for finished products from the west. As they are technologically inferior. Third world countries lag behind in development because of various factors but it should be noted that they why brought into the global capitalistic system through colonization-a stage in globalization, a phenomena whose effect was to be felt later more so with end of the cold war. This is one of the major reasons for the cause of under development in the least developed countries.

These poor countries have always sought various ways by which they can solve these development problems mainly through foreign aid and technical assistance that is overly done under the auspice of international institutions e.g. the World Bank and the IMF. These efforts have failed over the years to stem the sinking of these countries further down the path of under development hence today there is a new approach to development in the south through the need to attract and retain the foreign direct investments (FDI's).

One way of achieving these objectives has been through the privatization of state enterprises. Privatization is the sale, transfer or concession of government assets or services to a privately owned entity. This has been the cornerstone of the structural adjustment program advocated by the World Bank and the IMF in the 1980's to try and stimulate growth and development in the third world (Emmanuel S S, 1987). The aim has always been to increase efficiency brought by the need for profit maximization, and increase revenue to the state in