MNCs Critics and Defenders PDF

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MNC EFFECTS ON HOME COUNTRY TRADE AND PAYMENTS...

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MNCs Critics and Defenders

Northumbria university, Newcastle

Because of their visibility across the globe, international businesses have invited criticisms. They have defenders too. Letus examine MNCs as they are perceived by critics. These critics are activist groups that attack MNCs on environmental and rights issues.1. Challenge to Nation-state SovereigntyThe developing countries want control of their economies and want to achievetheir economic, political, and social objectives. The power of the MNCs can influence each of these objectives and in doing so may be obliged to give up some power and independence in exchange for the wealth an MNC may bring.2. InequitiesOne of the most enduring and persistent complaints about alleged inequities by LDCs is that prices of raw materials extracted from their countries, while prices of imported manufactured goods from industrialized countries are rising. This they say creates a growing inequity. Other perceived inequities include avoidance of taxes and giving the best management jobs to MNC home-country citizens.3. Interference with Economic Objectivesinterference can occur in many ways. For example, an MNC may wish to locate a plantin an area of prosperity when the host country would prefer its location in an underdeveloped region. MNC demands of local support can add to host-country

expenditures for infrastructure. Since MNCs typically do their research and development at home, hostn countries become technologically dependent on the MNCs for innovation. The MNCs have the strength to attract bank loans that otherwise might be available for local businesses.4. Social DisruptionThe introduction of different mores, habits, behaviors, and ethical values, new products, management styles, distribution systems, more money, and technology, do affect local ways of thinking and doing things.5. Environmental DegradationMany nations are becoming more concerned about the impact of MNCs on their environment. Environmental concerns are rapidly moving higher in the chain of priorities throughout the world.6. ImperialismMany of the awakening nations look on foreign managers with fear and distrust as the embodiment of an old, not easily forgotten, exploitative colonialism.7. Symbol of Frustration and AntipathyThe LDCs have grievances about their position in the world that have nothing to do with the MNC but the MNC is a convenient visible target for their anger.8. MNCs and Technologythe technology brought in by MNCs is hardly suitable to less developed countries. Such technology is highly capita intensive but developing countries need a lab our intensive one. In addition, technology brought in by MNCs is highly expensive. TheMNCs charge exorbitantly in

the from of fee and royalty, which put a severe strain on the foreign exchange resources of a developing country. There are also instances of ―technology is dumping‖, which implies that MNCs use obsolete technology with the help of turnkey projects shipped down from the principals of other counties. MNCs tend to make industries in developing countries permanently dependent on foreign expertise and technology. Fig 2. Grouse againstMNCsMNCS AND HOME SOCIETIESPublic attitudes toward MNCs are biased by a nation‘s position as a home or host country. Historically, home countries have perceived MNC activities as desirable extensions of their domestic business systems. Conversely host countries have viewed MNCs as agents of foreign influenced and exploitation. This historic dichotomy is now shot through with conflicting perceptions of the TechnologyFrustrationand antipathyImperialismEnvironmental degradationLossof sovereignityInequitiesInterference with economic objectivesSocial disruptionMNCs MNCs. Different segments of society, such as labor, investors, consumers, traders, and farmers,see their interests affected in different ways. As a result, a multisided controversy about the societal merits and demerits of MNCs has grown in both host and home countries.Home country

conflictsThe most aggressive challenge to the traditionally supportive home country policies towards MNCs has come from organized....