Multinational companies can efficiently reduce the lavel of poverty in the Least Developing countries.
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February 10, 2013 sunday
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Multinational companies are a corporation that is registered in more than one country and has its headquarter in their country of origin. A multinational company envelops new products in its native country and manufactures them abroad.
ReplyDeleteThe advantages of multinational company are they have a big market available in different countries, helps developing countries in earning foreign exchanges and they can reduce cost of production if they located their firm in the poor country . Multinational companies also give new skill and new technologies to the country and the local organization or firm can learn their strategy to product, distribute and promote their products. They also give jobs to all people in that country especially for people who do not have jobs. In the developing countries also have poor people without jobs and poverty is also an important issue. Everyone needs a job to fulfill their needs with the multinational company in their country it provides employment opportunities for all society. If the company opened a factory and need workers they can employ low-educated people and people who are not educated. If these people get a job that means reducing poverty in the country and reduce the crime rate there. Country's economy was also better. According to the US Small Business Administration about 96 percent of consumers and two-thirds of the world's purchasing power resides outside the US Sources of revenue from other countries help businesses survive periods of low domestic sales.
But the disadvantages of multinational companies for the country is the abuse of natural resources and human resources that may be doing by the company. Even in a country like the U.S. that has developed poverty remains to be a problem, although not as big as other countries. If the reduction occurs also there that means there are still people who are not educated and can be misused by multinational companies. With the presence of multinational companies abusing people who are not educated than the level of poverty there will not be reduced but will increase over time as more and more people to be lied by the company. They employed a long time but not paid comparable to what they are doing. The multinational company also cause the small firm of that country to go out from the business because they can not compete with the multinational company. They also give negative externalities to the country such as pollution, congestion and destruction of natural and historical sites in the country. They use the natural resources to produce more goods.
So the government should create different rules for multinational companies that do not abuse their natural resources and human resources available. And also the government should provide education to people who are not educated so that they get paid according to what they do and multinational companies can not lie to them. If it is not done then the poverty rate would increase even though it is in developing countries.
Well done Maria,
Deletegood you covered the many positive and negative aspects of MNC's for the developing world. Good use of Economics terminology.
8/10
Multinational is a business organization that has business operations in more than one country and they have their headquarters in their country of origin. There are some negative factors of multinational companies for the level of provety in the several countries that have their business operations.
ReplyDeleteFirtsly the multinational company can kick out the local business to get out from the market . which is can impact the poor people too because in a country there will be many small companies and maybe several of them have factory that can employ their local workers in quite big amount . if there’s a multinational company the small companies cannot compete against them, so their workers will be unemployed.
Secondly the multinational companies only offer the jobs for skilled people and sometimes they bring their own people to organize their business operations in many countries. Until now the main problem of the less development country is the amount of skilled people is not many . so there will be less jobs available plus if the multinational company kicked out the local company it can causes many unemployment people. Also in some multinational companies they are not providing the workers safety because most of the multinational companies do not care about the other countries , also they wanto maximize their profits and reducing their cost so they are not willing to pay for the workers safety.
Thirdly they can exploit the natural resources of the country , which is can causes the difficulties in several companies who need the natural resources for thei production , and also it can causes the difficulties for the people who work in primary sector such as agriculture , because usually the people who work for primary sector is poor people , if the multinational company exploit all the natural resources means the revenue of the workers is decreasing and it can effect their living cost , in the less development country there will be many people who worked in the primary sector.
Fourthly the multinational company can causes many external cost such as pollutions and etc. Pollution can causes several desease like respiratory tract and other dangerous deseases , many people in the country got desease for poor people especially they are not able to pay for they health care ,which can impact the country population .
Then some multinational companies can move their profit to other countries to avoid paying profit taxes to government , because multinational companies have to pay for high taxes , if multinational companies do that it can causes the decreasing in government taxes and it can affected with the subsidies that government provide for the poor people such as free school for the poor people , health care .
So the government must make the rule and regulation for the multinational company to assert , such as not take the natural resources haphazardly and etc if not the amount of poor people will be increasing and the country conditions becaome worst so it’s all depnds on the government rues and regulations.
Good Evelyne,
DeleteYou focused on the problem exploitative nature of MNC's with respect to the developing nations.
Good Your Score is 9/10
Multinational companies have really a major effect on the least developing country because multinational company can reduce unemployment in the country .those reducing the number of poverty that exist in the country ,because it opens up new employment opportunities.Multinational companies also can bring new skills that already buried because of full employment in the country.Another advantages of multinational companies are lead to competition with other local companies and can increase the of the economy exist in the country because there will be more and more people from overseas who will open multinational company to invest as well ,so in addition to reducing the unemployment rate by the multinational company will also open up opportunities that exist in the economy of the country.Multinational company assist developing countries to increase efficiency and productivity through transfer technology and foreign investment,it helps developing countries by providing the required financial ,technical and other resources in exchange for economics gains.
ReplyDeleteBeside the advantages of multinational companies there are also disadvantages resulting from multinational companies ,the size and competitive strength of multinational companies may destroy competitive environment in the country,because multinational companies will want to produce in ways and this may not always be the best environmental practice .Second is there are many low skilled employment in the local country the multinational companies may bring expatriate workers for the more senior and skilled roles and often with the limited local employment skills can create local employment pay and not worth the energy spent by local workers.Third is with a growing multinational company that can damage the existing natural resources as the demand of raw materials that a lot of the more well damages arising from the requirement for raw materials are rising.
so, the government should make laws that prohibit excessive use of natural resources so that country remains normal and doesn't cause damage,also limit the multinational companies so that the local industry cam remain competitive in the market,and give policy payment of workers appropiate salary for labor .The poverty can be overcome with the multinational companies as long as it follows the existing state regulations
-angraini natalia 10 bus-
Good work Angraini,
DeleteWith constructive introduction you give suggestions as well.
Well done. Score is 7.5/10
Multinational corporation is a firm that has business operation in more than one country but will usually have its headquarters based in its country of origin. Multinational are some of the largest joint stock companies in the world. A country is classified as a least developed country if it meets three criteria. First, Poverty (three-year average GNI per capita must exceed $1086 to leave the list). Second, human resource weakness (based on nutrition, health, education). Third, economic vulnerability. The example of least developed countries are Afghanistan, Bangladesh, Cambodia, Myanmar, etc.
ReplyDeleteMultinational always want to do profit maximization. To do that, they have to minimize the cost and maximize the revenue. Therefore Multinational companies are more interested to locating their business operation/plants in less developed countries because the cost can be minimized. It gives advantages to less developed countries.
First, Direct inward investment. By locating business operations/plants in the countries, it increases investment in premises, modern equipment and technologies. Example: United States is the world’s largest recipient of FDI (Foreign Direct Investment). US FDI totaled $194 billion in 2010. 84% of FDI in the US in 2010 came from eight countries : Switzerland, United Kingdom, Japan, France, Germany, Luxembourg, Netherlands, and Canada. This FDI helps US to survive in the economy. (Source: http://en.m.wikipedia.org/wiki/Foreign_direct_investment.com ).
Second, Multinational provide jobs and income for local workers. Multinational can minimize the labour cost by employing workers in low wage economies, it also helps local workers to get job. That is one of the reason multinational companies want to locate their business operation in least developed countries. They also can minimize the cost by locating the plant near to sources of materials. If they locate their plants in least developed countries, it means that the local businesses that work in primary sector will get the benefit.
Third, Multinational bring new knowledge and skills to the countries which will raise the quality of workers in that countries and it also will help domestic firms improve their production. Since Multinational companies are usually a big company, they tend to maintain the product at a good quality. Therefore they may train the workers who haven’t had enough skills. It raise the quality of the labour in that country. As the quality of the people rise, it encourages entrepreneurship which is good for the economy. The modern equipment and technologies that brought by multinationals will help the domestic firms to improve the quality of domestic product, so that the product can be exported to another country which will get export earnings.
Fourth, Multinational companies will boost government revenues by paying taxes on their profits. Since Multinational companies’ profit are usually more than the other businesses. It will boost the national income of the countries. If the national income increase, government can use the earnings to help people in least developing countries and can reduce the poverty in the country.
Fifth, Multinational increase export earnings through international trade. Since the production are run in least developed country and the product have to be distributed to another country. It means that least developed country will export the product to another country which will increase the export earnings.
Multinational companies can reduce the level of poverty in the least developed countries by investment, providing income, bringing new skills, paying taxes and international trade.
Charles 10 BN
Excellent work charles,
DeleteYou have provide lot of information with the sources.
good work keep it up. score 9/10
MNC or Multinational Companies are firms that have business operations in other country and usually be more than one. They usually also have a headquarters based in the country it is originally established. A country can be call a developing country if they have a low living standard, also undeveloped industrial base, and low Human Development Index (HDI) relative to other countries. Low Human Development Index includes low education, nutrition, and health care of the human living in the country. There are lots of developing countries in the world, however we’re going to talk about the least developing country. Example, Laos, Afghanistan, Niger, Myanmar and more country are listed.
ReplyDeleteMultinational Companies created more business operations in other country to earn more revenue as they can increase their sales, also reducing their cost would be one of their objectives. There are some country that have low cost of labor and materials such as China.
Now, first of all, Direct Inward Investment is increased as investment in new business premises, modern equipment, and cutting edge technologies are increased. Usually for this situation is called FDI or Foreign Direct Investment, it’s also a direct investment however this is invested by business in another country.
MNC also provide jobs and income for local workers of the developing countries. Also MNC can reduce their cost as workers paid in low wage, reason is that the country have low level of economic development. By establish more multinational companies, people can work and gain earnings. Since we know that developing countries have a low living standard, means some of them don’t have jobs and some are gaining less income.
Then, it can help the domestic firm in the developing country to increase the skills and knowledge of the local workers of their own productivity. Because MNC may introduce technique of producing goods to the workers that can help domestic firms to increase their production. MNC also have advanced technology as they have the capital to do research and development, it can teach the labor to also improve the quality of a product in domestic firms.
As taxes on profits are being paid by MNC, government would gain a boost of income. By this, government can allocate the income to become their solutions of poverty in their least developing countries. MNC usually create a lot of sales because they are a large firm. They create more income and also taxes are increases for government to take the benefit.
It also increases export earnings through the international trade. Since least developing country is producing goods on less cost, MNC would start producing their goods in that country. After producing the goods they would do export to other developed country as they have a better level of economic development and they can expect higher sales and also higher revenues which would generates more profits.
So, it is good for MNC to be established in the least developing countries as poverty of the country can be solved. Of course that by MNC make an impact on their economic progress it would eventually changes the condition of poverty as more people acquire skills, investment ,also government earned boosts of income, not to forget export earnings and job availability for people.
Leo 10 BN
The very ultimate goal of every for-profit business is to attract more customers and sell more of their products to bringing in more revenue and generate more income for the owners.
ReplyDeleteUsually, small business or for sole trader business often start their business by operate in a certain town, state or country, but as the times goes, the business will continually grows, owners might decided to start doing business in other countries. Business that conduct operations and sell to customers in multiple countries are considered a multinational firms.
Multinational company is a business organization that implement in different location of countries, usually up more than one country. Evrey type of business organizations has its own benefits and the limitations itself.
With multinational companies, it can bring much needed money into the country, for example, they pay higher taxes to the government and it also boost the government revenues. Although most of their profits do return to the company's country of origin, the local economy does benefit and with the advent of multinational companies in different countries, they promote productivity and efficiency in the host country by helps the development of other county that bringing in new technology and knowledge that the host country does not possess so it would raise the standard of living. Also, they create employment opportunities to the local population.
However, as the detriment of the MNC itself, they forced the small local business or new businesses to close down or out off the business because of the losses competition that they encountered. This way, MNC have been blame for the cause of poverty, contaminate environment and others; accelerate the collapse of the traditional way of the country life, for taking the benefits from governments by corrupting in the country where they do their business in. As well as, MNC often have jobs that highly skilled and so the company brings in their own people to do them. Also, the technological nature of many of these companies means that there aren't as many jobs as there might have been.
For some people, feel as though MNC companies eliminate the domestic worker and then for taking in the advantages.
Where, the standards of living for the employers are continually reducing. Labor, for example of this, they gets cheaper and cheaper which it will benefited to the MNC, but not the workers themselves and for furthermore, various of international trade agreements for large corporations can take advantages favorable in, to forcing to cheaper resources and it could including for the workers forces.
This is because when MNC comes to a country trying to impose some environment or societal considerations and legislation on MNC, they just move to a country the rules and regulations aren't as strict.
So, in that case for the advice, the government have to balanced the perspective that have to be maintained and for government should gain and keep the secure and responsibilities under international human rights standards to elude such protect the workers right to reduce the job losses that might continually to poverty.
-Christy Kusumo-
Multinational Companies are firms that have business production in more than one country, multinational companies are included in joint stock company. Usually the other name for multinational companies are MNC's. Multinational company is a very large firm because they can operate their production in another country. MNC always want to minimize their costs and maximize their profit as much as possible, because of that so they will do their business operation in another country that have lower costs than their origin country.
ReplyDeleteMNC have four advantages if they build their operation in least developing countries such as: Bringing new skills, investment for that country, increasing income to that country, and they of course paying taxes to the country.
First of all about bringing new skills, they can improve people in the country to be more intelligent and have new skills because of this MNC come to their country. They will get new jobs to be choose and wages, MNC also get benefited because they can pay lower wages than in their origin. People that work for a MNC in a country will be skilled and their knowledge will increase as they work in a factory or something like that. So, if the people skilled by the MNC and get wages from there the poverty in that developing country can be reduce.
Second about investment to that country. If a MNC make production base in developing country, it means they invest in that country by investing to that country, these least developing countries will be benefited because they have new investor that can pay with a really huge payment to invest there. FDI or Foreign Direct Investment also can benefited the country
Third increasing income to the country. MNC will make a country income increased because they will pay for buy the land and capital from the country. Also paying wages to the people in their firm and the people are from that country so MNC will make those people pay taxes to the government then government can make the country decreasing their poverty.
Fourth paying taxes, there are several taxes that MNC must pay to the country if they want build a factory there. so, with paying taxes to the country. country can reduce their poverty by using the money that have been paid by MNC.
The conclusion is a MNC can reducing a poverty of a country by paying taxes, new skills so the people can be knowledgeable, increase the income of a country and investment to that country. MNC also can get benefited by lower costs to be paid to the people than other developed country. so, they can increase their profit and also reducing their costs to maximizing revenues.
multinational companies are company or firms that open their businesses in another country. Usually more than one. Multinational companies are a big companies because they can operate their business in many countries. For example like careffour , careffour origin's country is in french. But they open their businesses in europe , china , indonesia , brazil , etc.
ReplyDeleteMultinational company alway do profit maximization by minimize their cost and maximize their revenue. Multinational companies can reduce the level of poverty in developing country because multinational companies are a very big firms so they will need a lot of labours. So people that are unemployed or doesn't have a job , can be join to the multinational companies. Especially in least developing countries that have high level of unemployement.
Multinational companies are also bring new skills to the country. So people that never got a job or people that have no experience in working before , can be teach to be skilled workers over the time goes on. But multinational companies also get the benefit for hiring a lot of workers. Because they paying the workers in low wages. So poverty in the country will be reduce because level of unemployment people have been reducing by multinational companies.
Multinational companies are high taxes companies. So they have to pay higher taxes than another firms to the country. Because of that the government income are increasing. If the government income are increasing , poverty in the country will be reducing automatically. Because the government will build more public facilities to the country such as telephone , free school , groceries ,etc and they will also use the money to help the poor people in its country.
Its also increase the export earnings in the country because they run the business in developing country that have low cost on production of goods. So they produce the goods in the developed countr that have low cost after that they export it to the developed country that has better level of economic. Because they can sell the goods in higher prices to get more profits to the company.
But , multinational companies sometimes take over the economies in the developing country. Because sole traders and other small business can't be stand against the big and strong ultinational companies. So people that have small business will be out of business because they can't survive with the economic conditions in the country.
Eventhough multinational companies are benefit because of high demand from the community. Their workers not always be benefited because they're do large scale of production process but their wages are still quite low.
So , the conclution is multinational companies can reduce the poverty of the developing country by higher income to the government , bring new skills to the country , and reduce the level of unemployement in the country. But the disadvantages are multinational company can kick all the small business in the country and alson they pay the labours in low wages. Eventhough they hiring a lot of workers.
Richard 10BN
Multinational Company is the company that has the business registered and operated in more than one country but usually have its headquarters based in its country origin. We can meet these kind of company in our daily life such as Royal Dutch Shell, this petroleum company's country origin is The Hague, Netherlands but Shell is well known all over the world and become one of the most popular oil and gas company so this multinational company bear with globalization and play the important role. Globalization itself meant the process of international integeration arising from the interchange of worldviews, products, areas and other aspects of culture.
ReplyDeleteNowadays, the multinational companies can established in many different kind of countries, from the developing countries, until the least developing countries. This Multinational Company itself can bring internal advantages ( for the company itself ) also external advantages ( the country that the company's established ). for the company itself like they can increase their sales because of the globally selling, they also can reduce their costs by locating operations in countries with low wages, and they can reduce the average cost because of the large scale of production and still many other benefits.
Based on the topic, Multinational companies can be efficiently reduce the lavel of poverty in the Least Developing countries. I don't 100% agree with this statement because
First, besides they provide jobs and incomes for local workers, they can also ireddicated small firms in the country itself.When the small firms forced to closed, they will fire the workers and also the owner of the firms will get loss, and gain no revenue, which meant there is huge possibility the poverty in the country developing.
Second, even the multinational companies bring new skills and knowledge to the least developing countries, they may exploit workers in low wage economies far less to do the same or even more work than employees in more developed economies. There is also probability that the company dont give guarantee about health and safety of the workers. When unexpected incident happen, example like a crash the workers have to pay the cost for treatment by himself/herself. Meanwhile in the other developing countries one of the rules or regulation is the MNC company have to guarantee the health of each wokers worked in the company. So in this case, the worker has to pay the treatment with his/her revenue. This meant the revenue keep decreasing and may cause poverty in the country.
Third, the MNC company can avoid paying taxes by switched between countries
with the lowest taxes. When this happened, the government revenue will decrease, when the government revenue decreasing, so do the subsidies and because of these the society keep suffering with their poverty.
fourth, Natural resources can be exploited and the environment damaged,This will cause big effect to the country because it appertain with resources that we (human) can take as much as we like. So when it happen, the farmers of the country will get a bad effect and make them lose their jobs because they gain nothing from their agriculture business.
So the conclusion is, it is not whole right that the multinational company can reduce the level of poverty in least developed countries. As the matter of fact they can make the opposite from the good effect become bad effect like the possibilities ive said above. So when the MNC company will be established the country has to supervise and keep the operation of company wont affect the other aspects.
Multinational company is a company which has facilities and factories around the world and is known worldwide. The sales of the company's goods and services are well-known and very profitable since it is a big business. Multinational companies are limited companies that are willing and able to open branches around the world, mostly in least developed countries. Examples of multinational companies are Microsoft, the famous soda drink Coca Cola, American Express, and others.
ReplyDeleteUsually, owners of a multinational company aims for a cheap price and place for opening a branch. They need huge hectares of land to build the factory and cheap resources including transportation to produce the products. This is beneficial for least developed countries like for example, Indonesia. The currency of Indonesia is very low for developed countries which make everything cheaper. Indonesia also has a very wide land in villages and unpopulated areas, which is perfect for foreign companies to build a factory there with cheap price. If the company opens a branch in a developed country, the fees will be more expensive and they will have to spend more in transportation to deliver and search for resources outside of the developed country. Countries like Indonesia also have a wide range of cheap resources which is a big advantage for big companies to purchase and import from Indonesia. They can pay cheap price instead of buying expensive resources from their country. Multinational companies will pay a big amount of money including government taxes which can help raise the country’s deficit, especially countries that are facing economic crisis. It can also help reduce the amount of unemployment. By hiring new employees the company will have to train them and they will turn from unskilled to skilled.
The disadvantage for the least developed countries is, more land will be populated with factories and firms buying the scarce resources of the country. A factory can trigger pollution which is very dangerous for the people. Least developed countries will be fooled by multinational companies who pay low price and most of them will get resources from the same country.
Overall, it is beneficial for least developed countries because they pay more for taxes which can help the country’s economy. Unemployed people will decrease and more skilled people will be there. The farmers and primary sector businesses can increase the price for raw materials for multinational companies and can increase their sales. It is almost beneficial to everyone including the government.
what is the impact of mncs on small traders..?
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