ESSAY STRUCTURE

Introduction: Key definitions, thesis point/line of argument

Body paragraphs: POINT->EVIDENCE->EXPLANATION
Conclusion: Answer the question/judgment, justification

ESSAY QUESTION: Evaluate the role of transnational corporations (TNCs) in the emergence and growth of
newly industrialized countries (NICs). (19_s_41)

ESSAY PLANNING:

- Intro: Definitions of TNC and NIC, general background

- Body 1:
Argument: TNC did play a major role in the emergence of NIC
Evidence: NICs influenced by TNC
Explanation: how TNCs are socially, politically, environmentally and economically impacting the
NIC, with more focus on the economic consequences of its operation
- Body 2:
Argument: There were factors other than TNC that have resulted in the emergence of NIC
Evidence:
Explanation: Even in the absence of TNC, some countries were able to industrialize
- Conclusion:
Final judgment: The role of TNC is indeed big
Justification 1:
Justification 2:
Newly industrialized country (NIC) can be defined as a country that has within recent decades
experienced a rapid productivity growth, export-orientated economic growth and a high export
tendency with end user durables and machineries accounting the major percentage of exports. Their
economy status is not at the level of developed countries, but in a macroeconomic sense, has outpaced
their developing counterparts. Transnational corporations or multinationals are companies that have
their headquarters in one country, and have operations, braches and assembly plants in two or more
countries. The operation of TNCs has expanded rapidly over recent decade due to globalization, and is
claimed to have a significant effect on the quick-paced emergence of the NICs. This essay will examine
the extent to which TNCs have influenced the current pattern of NICs in comparison between the other
forces that accelerated the economic growth of developing countries.

In many developing countries, the operation of multinationals has enabled the expansion of
industrialization. For example, the Asian Tigers which are made up of South Korea, Taiwan, Singapore
and Hong Kong, all of which went through the industrialization in the 1960’s when the TNCs in
developed countries looked for areas where they could benefit from lower cost and less strict
regulation. Even in the absence of substantial natural endowments, the plentiful, cheap and flexible
workforces started to attract multinationals such as Sony from Japan in 1990, and the technical
expertise and knowhow filtered from the TNCs have indeed played a significant role in South Korea
becoming one of the leading manufacturer of high-tech products. Taiwan in 1960’s had also been
targeted by multinationals. In the late 1960’s the American toy company Mattel moved its main factory
to the island of Taiwan in the quest of low labor cost. This was one of the first cases of large scale
manufacturers moving into East Asia; and at some point Taiwan was producing the half of total Barbie
dolls marketed on a global scale. These foreign direct investments coming from the TNCs have also
aided governments in the other fields such as health and education system, the construction of
infrastructure, which assisted in the recent accelerated growth- this shows that regardless of its
intention of benefiting from developing countries in term of low costs, TNCs surely accelerated the
industrialization process of NICs through its earning, investing and operation.

On the other side, it can be argued that even though TNCs have shaped the upward economic path of
many NICs, the reason why they chooses certain countries in the first place is highly dependable of
other factors such as the government policy, natural endowments, the skill and availability of labor force
and locational advantage. The world’s fast growing economy, China is the case where the government
policy has brought it to its current state. The dominance of China in the world market is deeply rooted in
the transition from centrally planned economy to a more market-oriented system in 1978. The Special
Economic Zones (SEZs) were introduced by the government in the early 1980s, which were the area of
more flexible economic management. In these zones, the operation of foreign businesses was
encouraged in return of preferable taxes, and by that time 14 new coastal cities were opened to offer
incentives for foreign companies to invest. In the case of India, it can be said that the recent growth was
highly attributable to its labor force. The industrialization in India was not as vigorous as in China, but
rather the service sector was booming rapidly. Outsourcing of work to India from developed countries
began in the 1980’s, and India used the experience and knowledge from outsourcing and working under
foreign companies to build their own companies in the international markets, which predominantly are
IT based or telecommunication companies.

In conclusion, the role of TNCs in the emergence of NICs has indeed been significant. Many of the main
manufacturers we know would not have been possible in the absence of FID, knowledge and skills, and
even the improvement in other aspects such as education that enabled by the TNCs that chose to
operate in the developing countries. The extent to which the TNCs can affect the host countries is not
limited to the economy, and there are many other both positive and negative impacts that have not
explained in the essay. Moreover, it is important to note that not all of the NICs have followed the same
path to reach where they are now. The government policy in receiving and using effectively the FDI, as
well as the ability to absorb the essential traits of developed countries such as technical expertise, can
be equally important in the boost of the country’s economy.