Impact of Multinational Corporations on Lesser Developed Countries

Impact of Multinational Corporations on Lesser Developed Countries

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(MNCs of multinational corporations) can operate `geocentrically', planning the location of their production and the pattern of their investment according to the balance of advantage across the whole capitalist world economy. For example, in the short-term these geocentric MNCs have the ability to increase the level of production in one country at the expense of another and in the longer term they could even shift the entire balance of their production between countries.

`new international division of labor' (NIDL) developed by Frobel (1980). NIDL draws attention to the impact of MNCs, but its specific purpose is to point to the development of a world market in which manufacturing production can be divided up into fragments and located in any industrialized or less developed part of the world, depending on where the most profitable combination of labour and capital can he obtained.

Though this analysis is strong on contemporary empirical detail, it also presents a historical contrast between (i) a `classical' international division of labour, in which a minority of industrialized countries produced manufactured goods and less developed countries were integrated into the world economy solely as producers of food and raw materials, and (ii) NIDL, in which the traditional `bisection' of the world economy is undermined.

what NIDL entails is the shutting down of certain types of manufacturing operations in industrially advanced countries (LACs), and the subsequent opening up of these same operations in the foreign subsidiaries of the same company.

According to (Lipietz, ) most of the jobs that are created in the developing countries involve `Taylorism' rather than `Fordism' and `primitive Taylorism' at that. {. . What he means by this is that the sort of jobs that are relocated mostly in textiles and electronics are not linked by any automatic machine system, yet they are fragmented and repetitive and thus labor-intensive in the strictest sense of the term.

Frobel wrote that "Most manufacturers prefer female workers because they have a longer attention span than males and can adjust more easily to long hours on the assembly line. in addition they are willing to accept lower pay and are said to have more agile hands, which is especially important in electronics.

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" However women are more adaptable than men to most of the skills required."

Though Frobel et at emphasize the contrast between the old international division of labour and the new, they see the latter as deepening rather than reversing the historical underdevelopment of lesser developed countries (LDCs): what applied to their agriculture and to mining is now replicated in the industrial sector. In their view there is no discernible transfer of technology. because the technology being employed is generally simple, because the skills acquired by the workforce in world market factories are seen as minimal because training rarely lasts for more than a few weeks.

the population is employed -- at very low wage levels, Others are reserve army. Fröbel . see world market factories remaining as industrial enclaves, unconnected to the local economy.

NIDL theorists have exaggerated the scale of the relocation of production, the Third World remains small.
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