Multinational companies in developing worlds (Pros and cons) Flashcards
What is an example of a multinational corporation?
What Are Examples of Multinational Corporations? Examples of multinational corporations include Apple, Amazon, Microsoft, McDonald’s, and Volkswagen. These companies are headquartered in one nation but operate divisions in many other countries in order to expand their business and reach more customers.
What are globalization cons?
The Cons of Globalization
The oppression of weaker and poorer economies by those that are more robust; “the rich get richer, the poor get poorer” The danger of job loss, with certain industries and sectors sending jobs to countries where workers are willing to do the same amount of work or more for smaller wages.
What are 5 negative effects of globalization?
It has had a few adverse effects on developed countries. Some adverse consequences of globalization include terrorism, job insecurity, currency fluctuation, and price instability.
What are the 6 main advantages of globalization?
Potential benefits of globalization for the economy include increased choice, higher quality products, increased competition, economies of scale, increased capital flows, increased labor mobility and improved international relations.
Did coca-cola hire below minimum wage workers in harvesting sugar cane?
Multinational corporations in developing countries employ millions of people, but the quality of these jobs is often low. When Coca-Cola instituted a bottling facility in El Salvador, its supply chain hired sugar cane harvesters. El Salvador needed this hiring surge, as its poverty rate is 25.70%. However, an Oxfam study discovered that many workers receive less than the minimum wage. Additionally, harvesters face physical risks (burns, lacerations, exhaustion). This is because their work entails cutting cane stalks with a machete in chemically treated agricultural fields.
How many children work in sweatshops?
Perhaps the most notorious examples of worker exploitation in developing countries are sweatshops. These facilities in MNC supply chains provide employment with long hours, low wages and unsafe working conditions. An estimated 250 million children work in sweatshops worldwide, working over 16 hours a day to provide products for the clothing and toy consumer base.
What do defenders of sweatshops say?
Some experts argue that sweatshops are helpful to local populations because they provide job opportunities that would otherwise not be there. This defense, the “Non Worseness claim,” essentially states that sweatshops are better than nothing and that even if there were regulations on improved wages and working conditions, the jobs would be outsourced to a place where those restrictions do not exist. Defenders of MNC sweatshops often cite this controversial idea.
What are the potential risk of MNCs hiring workers in low income countries?
At first glance, it may be easy to claim that MNCs are unequivocally good for developing countries’ economies. After all, they provide jobs that were not present before, even if they are dangerous and pay low wages. Additionally, MNCs bring in capital flow to developing countries by building factories, which require construction workers and surrounding infrastructure, thereby stimulating economic development in host countries.
However, beyond the short-term benefits, the economic value of multinational corporations in developing countries becomes rather hazy. Most of the profit produced by an MNC subsidiary in a developing country goes to the company’s parent country. In the case of El Salvador, most profits generated by cane harvesters return to Coca-Cola’s executives in the U.S.
Why do countries depend on other countries?
Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. By developing and exploiting their domestic scarce resources, countries can produce a surplus, and trade this for the resources they need.
Why do poor countries depend on rich countries?
When multinational countries flood the economic landscape of developing countries, small businesses and local entrepreneurs find it difficult to compete. Thus, host countries develop a kind of dependency where they cannot break off from the MNCs’ influence in fear of rising unemployment. They also cannot compete with MNCs because of their established production methods.
What is foreign dependency?
foreign dependency, global power structure in which weaker countries are economically reliant on stronger countries, allowing the stronger countries to exercise significant control over the weaker countries’ economic and political behaviour. Foreign dependency generally fosters underdevelopment in the dependent country; a country’s adoption of policies tailored to the interests of a stronger country may inhibit the weaker country’s domestic growth, speed environmental destruction, or create temporary growth that precludes sustainable development and economic independence.
Why do The Human Rights Watch and other humanitarian nonprofits want supply chain transparency?
The Human Rights Watch and other humanitarian nonprofits have called for supply chain transparency in MNCs, particularly clothing and footwear industries, to publicize and improve working conditions in sweatshops across the globe. These corporations would have to provide specifics about factories manufacturing their products beyond the general tag: “Made in China.”
Additionally, the social inequities surrounding MNCs appear to be a result of their intentions. Paying low wages, building factories with unsafe working conditions, and outsourcing production relate to a key goal of MNCs: the corporate mantra, “maximize shareholder value.”
Why should you look at the nation of origin when looking at a product?
For consumers, knowing that a multinational company produced a product tells little about the living standards or human rights of the workers who made it. Sometimes the nation of origin is a more valid indication. For example, few workplaces in Saudi Arabia or Kazakhstan respect the core International Labor Organisation agreements that those nations agreed to.
What are the three positive attributes of Multinational companies?
Create wealth and jobs around the world. Inward investment by multinationals creates much needed foreign currency for developing economies. They also create jobs and help raise expectations of what is possible.coca-cola-classic-soft-drink
Their size and scale of operation enable them to benefit from economies of scale enabling lower average costs and prices for consumers. This is particularly important in industries with very high fixed costs, such as car manufacture and airlines.
Large profits can be used for research & development. For example, oil exploration is costly and risky; this could only be undertaken by a large firm with significant profit and resources. It is similar for drug manufacturers who need to take risks in developing new drugs.
Ensure minimum standards. The success of multinationals is often because consumers like to buy goods and services where they can rely on minimum standards. i.e. if you visit any country you know that the Starbucks coffee shop will give something you are fairly familiar with. It may not be the best coffee in the district, but it won’t be the worst. People like the security of knowing what to expect.
Products which attain global dominance have a universal appeal. McDonald’s, Coca-Cola, Apple have attained their market share due to meeting consumer preferences.
Foreign investments. Multinationals engage in Foreign direct investment. This helps create capital flows to poorer/developing economies. It also creates jobs. 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.
