The Impacts ofTransnational Corporations on Less Developed Countries

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The issue of the impacts transnational corporations have on less developed countries has been a controversial and much disputed subject within the field of economics and development studies. Researchers using various models such as the Rostow Development model, Harrod Domar model and the Neoclassical Theory Model, have studied these impacts and have tried to come to a conclusion to this issue. Researchers have also conducted many case studies in order to investigate in depth factors contributing to impacts and whether there are differences due to external factors. The issue has grown in importance over the last decade and this paper attempts to discover whether the impacts are beneficial enough in order to uphold transnational corporation activities in less developed countries. The first section is a literature review, which will consist of a brief clarification of economic development and explain different economic development theories, which will help, evaluate whether activities by transnational corporations help accelerate economic development in LDCs. It will also consist of different scholars definitions of outsourcing, networking and linkages further evaluating the costs and benefits of these activities by transactional corporations. The analysis section will consist of a case study of Nigerian offshore drilling. This case study gives a more depth analysis of the negative impacts TNCs can have on LDCs. Transnational companies are contributing to economic development, showing positive and negative impacts transnational corporations have on host countries through real case studies that have been conducted by other researchers. The conclusion section will consist of an examination of all the research prior to this section to...

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...ntion of alleviating some of these issues it is not guaranteed that they will contribute to economic development, therefore the relationship between economic development and TNC’s may be harder to identify. (Huseyin 2000)
There has also been some research on host country’s Governance towards TNC activities in their countries. Filling the technological gaps has a major importance for LDCs to speed up their economic development and because of this it is shown that Governments in some developing countries may overlook human right abuses performed by foreign investors provided that certain economic targets are being fulfilled. (Giuliani & Macchi 2004)
The neoclassical theory supports this as it was previously explained and suggested that the underdevelopment of some countries is due to the government’s poor state of intervention, encouraging corruption and inefficiency.

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