globalisation/MNCs

help i've got to do this question for tomorrow:
Some argue that MNCs have a negative impact on the world economy. Can you identify at least 2 arguments to support this view.

I can only think of things to contradict this view! My textbook's so so so outdated it doesnt help. The only negatives that I can think of to do with MNCs are the work conditions etc, not economic things really.

Any help would be appreciated!

Reply 1

john !!

they do not care for the country, just profits

this means they can lead to a drain on the country's natural resources, as far as they are concerned the sooner they can get all the value and be gone the better. this will lead to job in the short term, but if the resources, such as oil or trees (or labour, eg. in India, getting higher) are depleted the economic growth will be unsustainable and the country will be left with negative growth and greatly falling living standards.

Also you might want to think of the environmental damage as well as the effect on economic growth. For example, logging in Africa is causing land to turn into desert as no trees means the water just runs away. This can harm farming but also destroy animal habitats and damage other exports such as tourism, no one wants to see the damage logging can do to the environment

so summary,
(a) MNCs can lead to unsustainable growth in the long run,
(b) MNCs can have negative effects on other industries and the environment (you can raise the point of market faliure with the environment)

Reply 2

chandni

you can maybe say something about capital flight where all the profits go back to the parent country on the mnc.

MNC's invest in Urban areas rather than rural areas which widens the distribution of income between rural and urban areas. (That's a bit minor though). MNC's often use capital intensive methods of production which can stop the country using a comparative advantage in labour intensive work...again a bit minor. I'd say the most important bad thing is the capital flight but then again I'm not all that good at economics!!!