Multinationals

Multinationals are large international companies which produce goods in many countries throughout the world. Some well-known ones are Ford, Shell, Coca-Cola, Sony and Unilever. Their turnover is huge, in some cases greater than the national income of some countries. Because they are so big, they attract a lot of media attention, and their business methods are usually carefully watched by foreign governments.

Criticism for and against multinationals 
Some people are concerned about the activities of multinationals in poor and developing countries. They question whether multinationals improve the economies of these countries. In response to this criticism, spokespeople for multinationals argue that they provide capital that poor people need for their economic growth. This capital together with local savings is used to finance their industries. Secondly, technology is shared with local business, which leads to scientific and technical methods being introduced. In addition, workers’ productivity is increased.

Benefits that result from multinational investment 
Multinationals produce a wide variety of goods and employ thousands of people all over the world, paying comparatively good wages. They claim that, as a result of their investment in local industry, communities can enjoy improved working conditions.

Criticism of investment strategies
Critics of multinationals do not accept such arguments. They say that the big corporations are not major supplies of capital investment. In Latin America, for example, multinationals have mostly used capital provided by local banks and investors and have not brought in capital from the United States and Europe. This means that the money that would have been available to finance local business has been used by foreign firms, and there is not sufficient capital available for investment in local enterprise.

Criticism of introduced technology 
The critics agree that multinationals introduce new technology. However, it is often unsuitable for developing countries. The imported technology is too expensive and complicated. It has been developed for industrial societies, not for poor countries. In agriculture, for instance, most countries do not need machinery which is expensive to buy and operate. They need better hoes and ox-ploughs.

New technology a threat to employment 
Another disadvantage of the new technology is that it can reduce the number of jobs available. Generally, technology is labour saving. This is because it comes from developed countries where wage costs are high. Poor countries can do without such technology because there are high unemployment rates.
Two examples prove this point. The building industry used to provide many jobs in the Third World. Now it employs fewer workers, because cranes, bulldozers and other labour-saving machinery are replacing many construction workers. In Latin America, bigger farms are using expensive imported machinery to increase production, and, as a result of this, are employing fewer and fewer workers.