What is the role of MNCs in globalisation?

I need around 4 points that I can expand on as well as ways in which MNCs don't contribute to globalisation. any help would be much appreciated.

Reply 1

Pirko

Original post by Bertybassett

I need around 4 points that I can expand on as well as ways in which MNCs don't contribute to globalisation. any help would be much appreciated.

Are you sure the question says "don't contribute" because they undeniably do, even by definition.

Reply 2

Bertybassett

Original post by Pirko

Are you sure the question says "don't contribute" because they undeniably do, even by definition.

yes sorry. i meant 'do contribute'. any suggestions?

Reply 3

Pirko

Original post by Bertybassett

yes sorry. i meant 'do contribute'. any suggestions?

Firstly note that economics isn't a settled science, and even the definition of what globalisation is, or whether the effects of this are negative are positive, are highly contested. I'll take the definition in this case that globalisation equates to the act of businesses operating and expanding on an international scale.

The most common contribution of MNC's to globalisation is the exportation of labour. Majority of commodities and consumer goods in the UK are not produced or manufactured in the UK, they are usually produced abroad and imported. Look at how China has boomed over the last 20-30 years, with it's rise in manufacturing and low wage regulations, creating it an attractive destination for Western countries to invest capital in. Investment in capital is therefore shifted abroad to save on overheads and increase profit margins of consumer goods.

As a result of operations moving abroad, the world economy is now more interlinked than ever. This means that if say China had a massive container shortage and was unable to shift large amounts of freight to the UK or indeed any other Western nations, the economies of all the players involved would be damaged. The dependence is nothing new, if you think back to the British empire for example you would see shades of dependence when it came to e.g. importing cotton, rice, etc. but in this new age of a "global economy" it is now the norm for some nations to depend on the production of the other in order to maintain the status quo.

Of course, many international governing bodies recognise that we are now in a global economy and depend on each other for food, product, services, etc. and therefore feel it to be a requirement to set an international standard, through supranational institutions such as the ILO (International Labor Organization). As it is the norm for us to export cheap labour abroad, the ILO has set in place international laws on human trafficking, working standards and worker rights so neo-liberal, commercial interests of Western countries that are investing heavily in cheaper labour markets are regulated adequately in order to hinder exploitation and sometimes slavery.

My narrative may come across as negative, but the view is quite balanced to be honest. Whilst some workers in the UK may have "lost out" on the opportunity to work in jobs that are now exported abroad, poorer people in developing countries may have been able to get out of a poverty trap to help support their families, and the developing economies as a whole have been able to emerge into key players in the global economic scene (think Brazil, China) to compete with the likes of America and Russia.