Mncs As A Force For Development Essay Example | Topics and Well Written Essays - 2500 words

Mncs As A Force For Development - Essay Example The unprecedented increase and expansion of multinational corporations has seen increase of interest among the media, scholars and the public who have explored the subject. Multinationals are deemed as key instruments in maximizing economic welfare across the globe while in other aspects they are deemed dangerous agents of economic imperialism (Ietto-Â ­Giles 2012, p. 33). These are issues and basic facts that have been examined by different scholars using different theories and have had different views and conclusions through different opinions and ideologies. Growth in multinational enterprises has been associated with growth in world economies through development of technology, information and communication as well as distribution of resources across the globe (Buckley 2009, 132). Multinationals have also been deemed vital in creating employment in the world markets and enhancing economic development in the economies where they have invested. However, these positive aspects have not been free from the possible perils that come with foreign investments and growth of multinationals. For instance, growth of multinationals in third world nations has been associated with the uneven development; this has mainly risen from overpricing of technology (Rodriguez-Clare 1996, p. 852). Aim of the study The main aim of this study is to explore the growth in multinational corporations and their spread across the world, with a view to examine the extent to which they are a force of development and progress. The study will explore the current trend in multinational corporations and identify how the growth has been associated with economic development and progress. The study will also examine possible perils associated with growth of multinationals. This will help identify whether the positive results of multinationals growth far outweighs the possible perils. Growth trend in multinational enterprises According to Buckley and Casson (2009, p. 1563), Multinational enterprises or the MNEs are defined as firms that own and control activities in more than one country through mergers joint ventures or franchises. These are businesses that are started in one country and later on start investing in foreign countries by establishing their market operations in the existing and emerging markets. There has been enormous growth in multinational enterprises or the MNCs and the international direct investment in the recent decades (Buckley, P & Casson 2003, p. 219). Companies based in industrialized nations have been leaders in establishment of multinational operations due to their strength in ownership advantages that is derived from innovation and highly advanced technological applications. Multinationals have been strongly associated with economic growth and trade. United States, Japan and Sweden among other developed nations are identified as leading home countries for most multinationals since the countries are mainly the source of the foreign direct investment (Dunning & Sarianna 2008, p. 182). FDI is one of the most common mechanisms used by MNCs to start and maintain business operations in foreign countries. Few companies were investing overseas in the early and mid-1960s, however, the trend of growth changed and there was significant change towards foreign direct investment activities. Since 1990s, there has been significant growth in international trade and production that has not only been reflected by the magnitude of the multinational firms but has also had sectoral composition of inflows and outflows. The significant change in sectoral composition and geographical investment activi