Multinational Corporation (MNC) Essay ⋆ Political Science Essay Examples ⋆ EssayEmpire

The multinational corporation (MNC), also called transnational corporation (TNC) or multinational enterprise (MNE), is a corporation with operations in more than one country. The most notable, and often controversial, scenario iThe multinational corporation (MNC), also called transnational corporation (TNC) or multinational enterprise (MNE), is a corporation with operations in more than one country. The most notable, and often controversial, scenario involves a corporation headquartered in a developed country (most of the world’s over 63,000 MNCs are based in the United States, Europe, and Japan) operating their production facilities in countries with the lowest labor costs (the developing countries of the global South). Proponents of economic globalization hail these transnational operations as an important pathway to global economic prosperity, while critics warn of the risks MNCs impose on poor countries and on the international order of states.
According to one central tenet of globalization, the liberalization of trade, through the reduction and elimination of tariffs, allows for the most efficient allocation of global resources. Now a widely accepted premise and goal, it heralds an important and significant shift on matters of international politics. With the power to impose duties and enforce tariffs, states were once the uncontested arbiters of global commerce. In today’s world of liberalized trade and open borders, it is the multinational corporation, the primary purveyor of goods and services, that often holds the power to influence and dictate the terms of trade.
Multinational firms are corporations from a legal perspective, but their transnational supply chains cause them to differ from domestic corporations in one important way: Because they operate across borders, state-level regulations are often inadequate to control their behavior. This presents a significant regulatory hurdle, because legislative coordination at the international level remains weak and unenforceable. MNCs cause a conundrum for scholars and policy makers alike. While they play a necessary role in global economic growth and development, their ability to skirt state regulation by shifting operations from one country to another makes them practically ungovernable.
According to proponents of globalization, economic development relies on transnational capital investments by MNCs, a phenomenon referred to as foreign direct investment (FDI). For the receiving country, foreign investment is an important and positive contribution to economic growth, which explains why leaders of various stripes strive to attract FDI. Yet critics insist that many issues plague the ideal of FDI-led prosperity, issues that reflect many of the broader critiques of economic globalization.
First, there is concern that the benefits of MNC foreign investment are unfairly distributed to the benefit of political elites rather than the middle class or the poor. Second, firms involved in commodity extraction export local resources for significant profit while returning little benefit to the local population. Third, MNCs own the majority of the world’s patents and intellectual property rights, giving them significant control over the diffusion of technology and skills. Finally, developed countries vying for FDI are often forced to reduce or eliminate regulations and restrictions on firm behavior, the result of which is a “race to the bottom” by firms seeking the loosest regulatory framework within which to operate.
While some scholars question the empirical validity of a race to the bottom, international competition for FDI is undeniable. Countries are reluctant to put restrictions on MNCs, resulting in the reduction of standards on matters of international import, including environmental regulation and the rights of workers. Not only are less-developed countries forced to loosen regulations, but developed countries have little transparency or control over the foreign activities of the corporations ostensibly under their jurisdiction.
The debate surrounding MNCs will surely continue. Paralleling the questions and concerns surrounding globalization, the benefits of MNC expansion must be balanced by the sober analysis of the threats they may also present to the international system of states.
Bibliography:
1. Chandler, A. D., and B. Mazlish. Leviathans: Multinational Corporations and the New Global History. Cambridge: Cambridge University Press, 2005.
2. Held, D., A. McGrew, D. Goldblatt, and J. Perraton. Global Transformations: Politics, Economics, and Culture. Stanford, Calif.: Stanford University Press, 1999.
3. Korten, David C. When Corporations Rule the World. San Francisco: Berrett Koehler, 2001.
4. Vogel, David. Trading Up: Consumer and Environmental Regulation in a Global Economy. Cambridge, Mass.: Harvard University Press, 1995.nvolves a corporation headquartered in a developed country (most of the world’s over 63,000 MNCs are based in the United States, Europe, and Japan) operating their production facilities in countries with the lowest labor costs (the developing countries of the global South). Proponents of economic globalization hail these transnational operations as an important pathway to global economic prosperity, while critics warn of the risks MNCs impose on poor countries and on the international order of states.

According to one central tenet of globalization, the liberalization of trade, through the reduction and elimination of tariffs, allows for the most efficient allocation of global resources. Now a widely accepted premise and goal, it heralds an important and significant shift on matters of international politics. With the power to impose duties and enforce tariffs, states were once the uncontested arbiters of global commerce. In today’s world of liberalized trade and open borders, it is the multinational corporation, the primary purveyor of goods and services, that often holds the power to influence and dictate the terms of trade.

Multinational firms are corporations from a legal perspective, but their transnational supply chains cause them to differ from domestic corporations in one important way: Because they operate across borders, state-level regulations are often inadequate to control their behavior. This presents a significant regulatory hurdle, because legislative coordination at the international level remains weak and unenforceable. MNCs cause a conundrum for scholars and policy makers alike. While they play a necessary role in global economic growth and development, their ability to skirt state regulation by shifting operations from one country to another makes them practically ungovernable.

According to proponents of globalization, economic development relies on transnational capital investments by MNCs, a phenomenon referred to as foreign direct investment (FDI). For the receiving country, foreign investment is an important and positive contribution to economic growth, which explains why leaders of various stripes strive to attract FDI. Yet critics insist that many issues plague the ideal of FDI-led prosperity, issues that reflect many of the broader critiques of economic globalization.

First, there is concern that the benefits of MNC foreign investment are unfairly distributed to the benefit of political elites rather than the middle class or the poor. Second, firms involved in commodity extraction export local resources for significant profit while returning little benefit to the local population. Third, MNCs own the majority of the world’s patents and intellectual property rights, giving them significant control over the diffusion of technology and skills. Finally, developed countries vying for FDI are often forced to reduce or eliminate regulations and restrictions on firm behavior, the result of which is a “race to the bottom” by firms seeking the loosest regulatory framework within which to operate.

While some scholars question the empirical validity of a race to the bottom, international competition for FDI is undeniable. Countries are reluctant to put restrictions on MNCs, resulting in the reduction of standards on matters of international import, including environmental regulation and the rights of workers. Not only are less-developed countries forced to loosen regulations, but developed countries have little transparency or control over the foreign activities of the corporations ostensibly under their jurisdiction.

The debate surrounding MNCs will surely continue. Paralleling the questions and concerns surrounding globalization, the benefits of MNC expansion must be balanced by the sober analysis of the threats they may also present to the international system of states.

Bibliography:

Chandler, A. D., and B. Mazlish. Leviathans: Multinational Corporations and the New Global History. Cambridge: Cambridge University Press, 2005.
Held, D., A. McGrew, D. Goldblatt, and J. Perraton. Global Transformations: Politics, Economics, and Culture. Stanford, Calif.: Stanford University Press, 1999.
Korten, David C. When Corporations Rule the World. San Francisco: Berrett Koehler, 2001.
Vogel, David. Trading Up: Consumer and Environmental Regulation in a Global Economy. Cambridge, Mass.: Harvard University Press, 1995.

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