• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Why is the operation of many TNCs in less economically developed countries so controversial?

Extracts from this document...


WHY IS THE OPERATION OF MANY TNCs IN LESS ECONOMICALLY DEVELOPED COUNTRIES SO CONTROVERSIAL? Transnational Companies/Corporations (TNCs) are companies that operate globally. They usually are based in MEDCs but have branch companies all over the world. TNCs dominate the economy of both their home countries and most of the economy in less economically developed countries (LEDCs), where they choose to invest. Due to this their economic and political power is immense. They are the most advanced system, which creates economic growth, wealth and poverty. The majority of TNCs are based in the United States, Japan, the United Kingdom, France and Germany. These are all more economically developed countries (MEDCs). Transnational companies tend to locate their factories in LEDCs because give them many advantages. They include very favourable tax conditions, very cheap labour and minimal supervision in respect of human rights. Big industries 'use local sub-contractors from Asia or Northern Africa; they no longer need to resort to foreign direct investments to benefit from the advantages of relocation.' TNCs have many negative points in the way that they run their companies in LEDCs: * Due to the fact that Transactional companies are owned by a parent company the profit made in other countries is never used towards that country. * Training is never provided for the workers. ...read more.


It has been estimated that almost 200 million children under the age of 14 are working full-time for Transnational companies like Nike and Gap. These children are paid very little, they do not receive and education and therefore have no chance of escaping their poverty filled lives in an attempt to make something of themselves. The economic reality is that children are typically paid one-half to one-third what is paid to adults doing comparable work. The children are often exposed to significant health hazards and subjected to extreme physical, verbal and even sexual abuse. While many children work to add to the family income, others are literally sold into bondage by their parents in return for money or credit. The International Labour Organization Convention stated that 'The minimum age...should not be less than the age of compulsory schooling and, in any case, shall not be less than 15 years...countries whose economy and educational facilities are insufficiently developed (are allowed) to initially specify a minimum age of 14 years and reduce from 13 years to 12 years the minimum age for light work.' This statement, however, has not been followed by major TNCs and therefore young child continue to work. Tiger woods and Indonesian worker pic go her Reports from CBS indicated that the minimum wage of Indonesia is deliberately set below the poverty line in order to attract foreign investors. ...read more.


We are not machines.' By working in TNC operated factories such as Nike the workers are put under extreme danger. They are exposed to dangerous chemicals that are released from solvents in sport shoes. If inhaled the workers are prone to may respiratory illnesses. They can be seriously injured by many things, including the heavy metal moulds used to press shoes with. If one it was to fall on an unprotected foot it can be easily crushed and may even have to be amputated. Strong steel-toed shoes should be provided to the workers as a means of protections. They are not. The workers complain that they do not receive adequate medical care and that they are only permitted to see the factory doctor who doest treat them properly. The workers are exposed to dangerous levels of heat and noise that could possibly be a danger to their health. The operation Transnational Companies in Less Economically Developed Countries is seen as controversial because they take advantage of the fact these countries are poor and need work. They believe that they are helping the countries by giving them jobs but in actual fact they are doing the exact opposite. People work for meagre wages and then the profit made by their hard worker is never used to benefit the country. LEDCs are treated as slaves to those countries who are wealthier. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Marked by a teacher

    Would It Be Economically Beneficial to Britain to Introduce An Obesity Tax?

    5 star(s)

    Another way in which people could be taxed is through the concept of direct and indirect taxation as therefore we could either tax the people who eat the fatty foods to discourage them from doing so (direct taxation) or tax the whole country in order to discourage everyone from both

  2. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    It is also apparent that the liquidity measures of the two bond indices show very slow response times to disequilibria. With significance attached to the response of the EMBI-G liquidity to changes in the second disequilibrium at the 1% level and the response of US corporate liquidity to the first disequilibrium at the 5% level.

  1. Evaluate the impact of Nike's outsourcing strategy and factory location on the host nation

    to investment by firms in other industries including domestic firms that has stimulated economic growth rather than Nike's operations. It has been suggested Nike doesn't stimulate local economies as developing countries such as China have to compete to gain Nikes contracts by offering nearly tax-exempt status, meaning Nike pays nothing

  2. China or India? Many companies ask themselves this question. Due to saturated markets, increasing ...

    There is a huge wealth disparity. An example is Phillips that had established a plant in China and also hoped to market its product in China. But soon it discovered that even its employees could not afford it to buy the products.

  1. Case Study: The Home Depot

    Of these people, a substantial amount will want to do this themselves. This part will visit retailers in the home improvement industry. In this way, the home improvement industry grows. A bad economy does not have to mean that the home improvement industry goes bad.

  2. The Famous Grouse - company profile and exports

    This expansion of famous grouse will hopefully maintain the market share and profits, which is very beneficial in the long-term. Along with increasing the profits and the market share of famous grouse it will raise the international profile of famous grouse.

  1. Living Wage

    In the race to sell goods at the lowest possible cost and to sell the maximum number of goods or services, companies show lack of social conscience. Moving to the larger issue of free trade and especially the criticism that it has widened the gulf between the rich and the

  2. Why does the multinational company Nike choose Indonesia as the location to be its ...

    I believe Nike chose Indonesia because the setting up and running costs of maintaining the factories itself would be vastly cheaper than setting up in a more developed European country. This is due to the smaller economy, lower living costs and availability of labour.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work