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

The Impact of Transnational Corporations on Less Economically Developed Countries

Extracts from this document...

Introduction

David Pearce The Impact of Transnational Corporations on Less Economically Developed Countries A transnational (TNC) corporation is simply a large business organisation which operates and has ownership of assets in more than one country. Most TNCs operate in just a few countries, are involved in manufacturing and services and have their head offices in more developed countries. TNCs are responsible for employing over 40 million people worldwide, indirectly influence an even greater number, and to control over 75 per cent of world trade. At first, many branches of TNCs were located in economically less developed countries, but there has been an increasing global shift to the affluent markets of Europe, North America and Japan. The reason why TNCs originally decided to locate in less developed countries was due to the existence of valuable resources, but the most important reason was the level of incentives offered by the home government. If a TNC decides to settle in an LEDC, there will be huge benefits. Many new jobs will be created, which will be filled by local labour. ...read more.

Middle

This could also help to improve output further because workers will be in a better environment and mood to work. Money can also be used for environmental control, which could include developing ways of minimizing the amount of pollution certain industries create and even developing new production methods. Although the advantages to the country are numerous, there is a negative side which includes many disadvantages. Although the new TNC will supply many jobs, the cost of investment will be high. The new TNC will know that wages in the target country are very poor and so they will not have to pay workers as nearly as much as they pay employees in MEDCs. This is quite unfair, because the TNC is taking advantage of the people in the LEDC. Furthermore, employees will be made to work very long hours with little or no breaks. The TNC will most likely choose not to employ local highly skilled workers, because they will expect higher salaries and better working conditions. This will mean that low skilled people will be given jobs, but higher skilled workers will remain unemployed. ...read more.

Conclusion

The problem is that the TNC would not benefit as much from these improvements so it does not concern them. The development of new firms can damage the environment because land must cleared for factories to be built. This could destroy the natural homes of species of animals, which is very difficult to correct. Because the target country will not be aware of the amount of pollution produced by industry, the laws on pollution control will not be as tight as the country where the firm is located. This could cause health problems, especially if a lot of waste is produced and dumped into the local water supply, for example. It is clear that there are many advantages and disadvantages in terms of TNCs creating branches in other countries. The real problem is that the disadvantages mostly affect the target country, not the TNC. So until LEDCs are aware of the problems caused by firms settling in their country, the chance of the growth of TNCs slowing down is very small. This could cause the gap between the levels of development in LEDCs and MEDCs to become even wider in the future. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Global Interdependence & Economic Transition 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 AS and A Level Global Interdependence & Economic Transition essays

  1. Marked by a teacher

    Referring to both pharmaceutical and tobacco companies, explain how transnational corporations can influence the ...

    5 star(s)

    Cheaper drugs to combat these common diseases cannot be produced as some pharmaceutical companies patented their branded drugs to increase their profits and eliminate competition from rival pharmaceutical companies. Although pharmaceutical companies may be harming the health of populations in LEDCs by patenting their drugs for twenty years, many of

  2. tourism impact

    On the other hand, tourism has the potential to create beneficial effects on the environment by helping to reach environmental protection and conservation. Negative impacts from tourism occur when the level of visitors is greater than the environment's ability to cope with it.

  1. Development of the leisure and recreation industry

    Sports and physical recreation The sports and physical recreation component of the leisure and recreation industry covers a broad range of facilities, events, products, services and activities. The growing interest in healthy lifestyle and the link with fitness and exercise have been a major influence on sports participation since 1980.

  2. Free essay

    Transnational corporations. There are two types of TNCs that affect health globally in very ...

    Its aims were to reduce global smoking and the number of tobacco related illnesses worldwide. However, there are concerns that tobacco TNCs are now targeting countries who have not yet signed it so that they can still expand into various other markets. PMI (Phillip Morris International)

  1. Assess the extent to which Trans National Corporations (TNCs) have a positive impact ...

    also clothing, sports goods and toys. TNC's help with the transfer of technology, resulting in benefits in both the developed and developing country in the process, additionally, and barriers are broken between countries as trade is introduced, this helps with the flow of income and outcome of the separate countries

  2. Can developing countries ever catch up with developed countries

    Therefore, the solution takes the form of an attempt to make underdeveloped societies more like developed ones, by means such as "structural adjustment", privatisation, free trade, democratisation and anti-corruption drives. The argument which supports the 'development problem' analyses stems from neo-liberal economics.

  1. Investigation. Hypothesis: Students from developing countries tend to associate the responsibility of global ...

    that in fact students from developing countries associate the responsibility of global warming on developed countries. This can be seen from the fact that 85 percent of the students from developing countries that were questioned, felt that developed countries were the most responsible.

  2. Outline and suggest reasons for the issues facing countries at very low levels of ...

    there is an obvious lack of affect form this aid, with this amount of money it seems unbelievable that there is only 10% reduction in extreme poverty and still large amounts of under development. It?s therefore clear that there is a lack of results from this and it could be argued that with many problems in developed countries, i.e.

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