Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Impact Of Multinational Corporations On Well Being In The Developing Countries Add in library

148 Download6 Pages 1,326 Words

Question:

Describe about the Impact of Multinational Corporations on Well Being in the Developing Countries?
 
 

Answer:

Introduction:

A Multinational Corporation (MNC) is an organization that is involved in business with more than a country. The other names that are used to refer MNC are international corporation, global giant and transnational corporation. Multinational corporation, according to the United Nations, is an organization that acquires or controls production or service facilities other than the country in which it is based. MNCs home country has its headquarters and its host countries operates business across the world. The various activities of the MNC’s are exporting, importing, manufacturing in different countries. It may also impart patents, licenses and managerial services to firms situated in the host countries. A developing country is characterized with a low standard of living, underdeveloped industrial base and with a low Human Development Index compared to other countries. Developing countries are a non industrialized poor country that needs an opportunity to develop and expand its resources by the process of industrialization. With the advent of globalization and Industrial Revolution, more of developing countries are attracting the multinational corporations to generate business in the countries to increase the general standard of living and status of the developing countries. To understand the importance of MNCs in the developing countries we need to answer the questions: What is an MNC and its role and objectives? What is meant by well being and its indicators? (Burchi & De Muro, 2015)

 

Objectives:

MNCs are aimed to make investments in different countries to:

Obtain tax benefits in host countries.

Utilize and exploit the resources of the host country.

Acquire the advantages of government concessions in host country.

Alleviate the impact of regulations in home country.

Utilization of cheap labour and low transportation expenses in order to reduce cost of production in the host country.

Gain a dominant position in foreign markets.

Enlarge activities vertically. (Giuliani & Macchi, 2013) (Soni, 2015)

Well being and its indicators:

Well being is defined as the process of how people feel and how they function either personally or socially and people evaluate their lives. The concept of how people feel is in the form of emotions like happiness and sorrow or anxiety, by people function in which they get connected to the rest of the world. The concept of how people evaluate themselves lies in the fact that each people has a level of satisfaction which is defined by the standard of living, utilizing the basic necessities of life like food, clothing and shelter, and also how they rate themselves in comparison to the best possible lifestyle. Now the economic well being is a much wider concept which not only includes the emotions, satisfaction or the rating of individuals based on their lifestyle, but also has a much deeper meaning when it comes to measuring the economic well being at an national level. To understand this economic well being at the national level, it is important to understand the basic indicators of the economic well being. We shall define it further.

 

Indicators:

1. GDP per head (Real Gross Domestic Product per capita)- the growth in GDP is an indicator of economic well being but what is to be kept in mind is the growth in population by considering GDP per head.
 
2. Real NNDI per capita (Real Net National Disposable Income per capita)- this is the total income available to residents of a country. This reflects the standard of living of the residents thereby indicates the measure of well being.
 
3. Household Income per head- all the incomes of the economy is not comprised of only household but the incomes are also generated by the firms and government.
 
4. Unemployment rate- unemployment has always been used as the measure to indicate the state of any economy. Thus the rate of unemployment can be considered as the indicator of well being.
 
5. Inflation rate- (Consumer Price Index)- inflation impacts the household and net wealth of the nation. Thus to measure the economic well being, it is necessary to take into accout the inflation rate.
 
6. Human Development Index- this index includes areas like education, health and income. HDI is calculated based on the per capita income, life expectancy rate and gross enrollment ratio to schools. Thus HDI is the perfect indicator to the economic and national well being. (Soni, 2015)
 

Impact of mncs on the well being in the developing countries:

Developing countries need the scope to develop and expand. In achieving this most of them are attracting Foreign Direct Investment (FDI). The governments of these developing countries are in the constant urge to attract the multinational corporation with the view that such extracting would benefit the economy. MNCs are considered to be the channels of generating, employment and bring about important changes in the technology, help the local firms to increase their productivity and potentiality to export. MNCs play a very important role to diversify and improve the level of economic development within the economy. Let us consider a developing nation, India and the impact of MNC on India’s well being.

India, since 1991, India has experienced an upsurge within the economy in the presence of MNCs and with this there was tremendous increase in the amount of FDI. The adoption of new economic policy by India in 1991 has three characteristics: opening up of the market to global markets, reduction in import tariffs and state intervention in domestic policy making. In the presence of MNCs India had accumulated around $56.6 billion in FDI contracts from 1991 to 1998. He crisis in 2991, led the growth rate at 1.2% but by 1995-1996, the growth rate reached7.1%-7.5% respectively. Also with liberalization, there was an increase in employment as MNCs created a lot of Jobs. This also increased the requirement of NDDI per capita and real GDP per capita. Thereby increasing the level of standard of living and thus incorporated the economic well being. Since people now have more money to spend, they can available better education, health and better standard of living. (Business.mapsofindia.com, 2015) (EMDE, 1999)

 

Data Of India: Inflation, Export Percentage, Gdp Growth And Fdi Net Inflows (1999, 2012, 2013)

Indicators/Years

1991

2012

2013

Inflation consumer prices annual %

13.8702460850107

9.31244560487356

10.9076433121022

Export % of GDP

8.34784516438306

23.9962372282035

24.8151043451569

GDP growth annual percentage

1.05683143249473

4.73628815518559

5.01699449999728

FDI net inflows % of GDP

0.0267562982506533

1.29096182677634

1.50005718696361


Data Source: World Development Indicator, World Bank.

The data reveals that after 1991, the some of the economic well being indicators rapidly increased till 2013 in India. (Data.worldbank.org, 2015)

 

Conclusion:

The impact of MNCs on the well being of the developing countries is diverse and is augmenting. With the globalization and industrialization, all the developing countries are able to generate jobs, reduce inflation rate, establish GDP growth and improve the status of these developing countries’ HDI. All these indicators tells us that the economic well being of the developing countries is much more appealing. (OVERSEAS DEVELOPMENT INSTITUTE, 2015)

 

References

Burchi, F. and De Muro, P. (2015). Measuring Human Development in a High-Income Country: A Conceptual Framework for Well-Being Indicators. Forum for Social Economics, pp.1-19.

Business.mapsofindia.com, (2015). Sectorwise Analysis of FDI Inflow in India. [online] Available at: https://business.mapsofindia.com/fdi-india/sectors/ [Accessed 9 Feb. 2015].

Data.worldbank.org, (2015). India | Data. [online] Available at: https://data.worldbank.org/country/india [Accessed 9 Feb. 2015].

EMDE, M. (1999). AN ANALYSIS OF THE EFFECTS OF MNC ON INDIA SINCE LIBERALIZATION. [online] https://artsandscience.usask.ca/. Available at: https://artsandscience.usask.ca/economics/skjournal/sej-2nd/sej2-emde.pdf [Accessed 9 Feb. 2015].

Giuliani, E. and Macchi, C. (2013). Multinational corporations' economic and human rights impacts on developing countries: a review and research agenda. Cambridge Journal of Economics, 38(2), pp.479-517.

Hansen, M., Pedersen, T. and Petersen, B. (n.d.). MNC Strategies and Linkage Effects in Developing Countries. SSRN Journal.

OVERSEAS DEVELOPMENT INSTITUTE, (2015). Post-2015 MDGs. LONDON: OVERSEAS DEVELOPMENT INSTITUTE.

Soni, S. (2015). Essay on the Meaning and Definition of Multinational Company. [online] Preservearticles.com. Available at: https://www.preservearticles.com/2012010319696/essay-on-the-meaning-and-definitionof-multinational-company.html [Accessed 9 Feb. 2015].

OR

MyAssignmenthelp.com delivers assignment help to millions of students of USA. We have in-house teams of assignment writers who are experts on wide ranges of subjects. We have appointed teams of native writers who provide assignment help to students in New York City and all over the USA. They are skilled assignment writers who successfully cater to search terms like do my assignment in the USA

Most Downloaded Sample of Management

271 Download1 Pages 48 Words

Toulin Method Of Argumentation

You are required to write a researched argument essay that convinces persuades the reader of your position / stance. This is an academic, researched and referenced do...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
202 Download9 Pages 2,237 Words

Consumer Behavior Assignment

Executive Summary The purpose of this report is to elaborate the factors which are considered by individuals before selecting an occupation. Choosing an occupati...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
367 Download13 Pages 3,112 Words

Internet Marketing Plan For River Island

Introduction With the increase enhancement in the field of technology, it has been considered essential by the businesses to implement such technology in their b...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
326 Download9 Pages 2,203 Words

Strategic Role Of HR In Mergers & Acquisitions

Executive Summary In a merger & acquisition, role of an HR has emerged as a very critical function. At each stage of merger and acquisition process, HR plays a s...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
354 Download7 Pages 1,521 Words

Relationship Between Knowledge Management, Organization Learning And HRM

Introduction In this competitive business environment where every business organization is trying to attract the customers of each other, it becomes essential for ...

Read More Tags: Australia Arlington Management Management University of New South Wales Management 
Next
Free plagiarismFree plagiarism check online on mobile
Have any Query?