Question

Be sure to address each point in the question and explain your reasoning carefully.

1. What controversies do Multinational Corporations (MNCs) face in developing countries? What political strategies can MNCs adopt to avoid those controversies?

Fill in blank

1. ____________________ countries have historically enjoyed both the largest outflows and inflows of foreign direct investment (FDI).
2. By the 1920s, ____________________was overtaking Britain as the world’s largest source of foreign direct investment (FDI).

Answer 1

Multinational corporation (MNC), also called transnational corporation, any corporation that is registered and operates in more than one country at a time. Generally the corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in other countries. The subsidiaries report to the central headquarters of the corporation.

Multinational companies have a big impact on the world, not just on the economy but also on the environment and society. From oil spills to child labor, companies’ activities and mistakes can impact people and the planet, particularly in more vulnerable countries. ‘Sweat-shop labour’ multinational corporations have been criticised for using ‘slave labour’ – workers who are paid a pittance by Western Standards.

Multinational companies can create wealth and jobs around the world. Investment by multinationals creates much needed foreign currency for developing economies. They also create jobs and help raise expectations of what is possible. This helps create capital flows to poorer/developing economies. Although wages may be low by the standards of the developed world – they are better jobs than alternatives and gradually help to raise wages in the developing world.

Developed countries have historically enjoyed both the largest outflows and inflows of foreign direct investment (FDI).
By the 1920s, United States was overtaking Britain as the world’s largest source of foreign direct investment (FDI).

Historically most FDI has been directed at the developed nations around the world, as firms based in these countries invested in each others' markets.

During the past few decades, the United States has been the favourite target of FDI inflows.