ESSAY PLAN 1.

Along with the benefits multinational companies bring such as creating jobs, paying taxes and bringing new investment and technology, their prosperity raised concerns regarding the environment, labour exploitation and unfair competition against local rivals. 2. Benefits of multinational companies A. New investment and technology B. Creating many jobs and benefits of taxation C. Encouraging local rivals to be more effective, innovative and competitive 3. Disadvantages of multinational companies A. Labour exploitation and labour rights misuse B. Harming local environment C. Leading to the destruction of local rivalry 4. Governing bodies can act as a controller in disciplining multinational companies. 5. Since multinationals are fundamental features of todays economies, in both developed and developing countries, rigorous and fierce discussions regarding the advantages and disadvantages of multinational companies seem likely to emerge in the coming days.

Multinational companies, as its name implies, are companies that operate in at least another country than its home country. Multinational companies started spreading all over the world in recent times, partly due to the removal of long-existing international trade barriers by command economies such as China and Russia. Along with the benefits multinational companies bring such as creating jobs, paying taxes and bringing new investment and technology, their prosperity raised concerns regarding the environment, labour exploitation and unfair competition against local rivals. Elimination of trade barriers boosts multinational companies ability to expand in developing countries (Palaniyandy, 2010). This boost, however, is not always seen positive especially by members of public. Capitalists applaud multinational corporations and see them as heroes; anti-globalists take a negative position and see them as their enemy. This Jekyll and Hyde perception (Engel, 2011) for multinational corporations originates from uncertain ideas regarding their position. To discuss the positive and negative aspects of multinational companies, an objective stance is taken and the analysis of multinational companies situation is presented in this paper. First benefit multinationals bring can be stated as new investment and technology they deliver into host countries. Multinationals help increase the growth rate of the host country with their investment, skills and capital. Especially for developing countries, foreign direct investment is crucial for their economy. Without the presence of the investment and capital brought into country, it is hard to think some developing countries economies prosper. It is also good for the multinationals to organize their production abroad since they are able to take advantage of free trade and low transport and labour costs. Secondly, multinational companies create many jobs in the host country. The unemployment rate of host country decreases since the investment of a multinational corporation creates jobs in supporting industries as well. Germany can be given as an example where there is a supporting circle around chemicals, synthetic dyes, textiles and textile machinery. These jobs created also benefits the government since more investment means more taxes for the government. Large scale multinational companies taxation is a major source of tax in some developing countries. Third benefit multinational companies provide can be argued as the encouragement of local rival companies to be more efficient, innovative and competitive. In order to survive, local companies react to multinational companies actions. This respond is such that smaller companies take necessary measures to become more efficient, creative and ambitious as fight for market share intensifies. As for objectivity, one needs to look at the other side of the coin as well. Antiglobalists, social welfare, environmental protection, labour organizations and government agencies protest multinational companies for a number of reasons worldwide (Eldridge, 2010). Some of these concerns have found grounds but some are yet to be proven. Palaniyandy (2010) argues in his paper that profit-centred institutions look for low cost labour, leading to exploitation of women and children in developing countries. He

exemplifies this by giving a fact that women get only one tenth of the total payment despite their engagement in sixty six percent of all work done globally. In developing countries, it is also possible to misuse employee rights since there seems to be little or no legislation to cover these areas for multinational companies. Another reason why multinational companies seen as bad is that multinational companies engaged in production can potentially harm local environment by disposing hazardous chemicals, smoke, etc. This is more prevalent if there is a gap in the legislation of the host country. As an example, in some developing countries furniture makers are cutting massive amounts of trees, which is not sustainable and harming the nature, leading to increased pollution and lesser green spaces for next generations (Palaniyandy, 2010). Finally, what is seen positive by one human being can be seen as negative by another. Third benefit mentioned above for multinational companies, encouraging local investors to respond, can at the same time be given as the third disadvantage, leading to the destruction of local competition. Multinational companies do this by simply using their competitive advantages arising from scale economies, pushing small-sized local businesses to bankruptcy. Governing bodies can act as a controller in disciplining multinational companies. Instead of being fearful of multinationals that they will move operations elsewhere, governments should focus on monitoring the acts of multinational companies closely, and interfere where necessary. Since most multinationals are profit-driven, it is logical for them to make the best use of everything to bring costs down. As for national security, health and safety counts, it is government agencies responsible for the overall wellbeing of the country and its people. As an example, BP oil spill can be mentioned here. When the spill occurred BP, a giant multinational, faced public anger and political pressure so much that they had to agree paying out $20 billion to meet claims for economic and environmental losses (Khor, 2010). In conclusion, along with the benefits stated above, multinational companies can bring some negative effects and drawbacks to the host nations if not dealt properly; such as labour exploitation, environmental damage and economical depression. Multinational companies of developed countries should not be allowed to misuse or exploit the conditions of developing countries. Because globalisation is inevitable in this era, developing countries just need to make sure they are benefiting from the existence of multinationals. Necessary legislation should be passed by policy makers to assure multinational companies provide sustainable growth opportunities for their country, not a threat. Since multinationals are fundamental features of todays economies, in both developed and developing countries, rigorous and fierce discussions regarding the advantages and disadvantages of multinational companies seem likely to emerge in the coming days.

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