'The growth of transnational corporations has had a major impact on a number of countries around the world 'Discuss this statement with reference to MEDCs, LEDCs and NICs
‘The growth of transnational corporations has had a major impact on a number of countries around the world’ Discuss this statement with reference to MEDCs, LEDCs and NICs A TNC is a company that operates in no less than two countries. An example of this is Nokia a mobile phone company who are based in Finland but also have manufacturing plants in Hungary and Bulgaria. The also make some handsets in Mexico. TNCs have increased rapidly over the last 30 years or so; this may be due to a number of reasons. Governments in NIC (newly industrialized countries) have tried to lure TNC to their countries. One way they have done this is by keeping the land prices artificially low; this is so the TNC can build factories and other building for less money. They also have a relaxed attitude to environmental laws so the TNCs do not have to pay out for expensive treatments for their waste so it complies with strict
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laws like the ones they have in the US, UK and Japan. Another thing that attract TNCs to NICs is the cheap labour cost, weak unions and lack of minimum wage. This means that the TNC can pay workers less, not worry about providing good working conditions. All of these factors greatly benefit TNCs because they can produce their products or components for a fraction of a price that they would have to pay in their country of origin. Another thing that has enabled companies to spread out over the globe is the fact that global communications and travel has improved. Emails make it much easier to communicate with colleagues in other countries and not have to worry about time differences. Satellite links have allowed people to have video meetings even if the people taking part are miles apart. This makes it easier to organise plans and strategies if the people can have a conversation instead of a series of messages. Cheaper air travel has also made it possible to visit company HQ in foreign countries which is beneficial because it makes it more cost effective to set up in a new country and also to keep that branch of the business running if you can get people from HQ to go to the base in the NIC and help set-up systems or sort out any problems which they are having. Most of the ‘mother’ countries of TNCS are MEDCS such as USA, Japan and Western European nations and they tend to locate in the ‘Asian tigers’ (countries such as Vietnam Thailand and s. Korea) the presence on TNCs in these countries has had a positive effect on the NICs and its population. The most workers are paid the same as professional workers in those countries (in Vietnam the workers in one of the factories Nike sub-contracts to are paid the same as the teachers.) this shows that compared to MEDC standards they are paid much less but for their home nation they receive much more than they would have made if they had stayed in their jobs they had before the factories came (most would have been farm workers or in other primary employment. The case is the same in all TNC and an example of this can be seen in S. Korea, in 1951 they had the same GNP as a sub-Saharan country such as Kenya. But since TNCs have moved in the average wealth is at the same level as Spains. There have been claims that TNCs are exploiting the people and environment of NICs but in factories that most TNCs own or give work to have specific guidelines on the conditions of workers to make sure that they are not working to poor or un-healthy conditions. The environment however, is a completely contrasting situation. Since TNC moved into Thailand its has lost 48% of its forest to either logging or death due to pollution. Many people are anti-TNC because of the exploitation of workers in NICs but also because of the example of the damage TNCs do to the environment. A British TNC, ‘Rio Tinto Zinc’ mines precious minerals around the world had set up in Papua New Guinea the company produced one million tonnes of waste, a crater 7 km square and killed a rare species of fish. However due to the lack of environmental law and regulations the government cannot do anything about it. On the other hand many people including employees are supporters of TNCs because they have improved the life of many people in a lot of countries who other wise would have had to scrape out an existence in rice fields of in locally run factories with worse conditions and poorer pay than they would receive in factories connected with TNCs. In this essay I have tried to show the good and bad sides of TNC and also reasons for why their number have increased so rapidly. In conclusion I feel that TNCs are a mixed blessing to NICs. Its is good for them socially and economically however from an environmental view allowing TNC into a country is a big mistake unless the government tighten laws on treatment of waste etc which I feel they would not do because they would loose soe of the attraction they have to TNCs if they did.