THE ROLE

MUSAB ALAELDIN ELAMIN TAHA Dr. HASAN ALPAGO

OF
ID: 20231559025 SUPERVISOR
MULTINATI Introduction:
ONAL
Multinational corporations are known for their ability to
COMPANIES generate substantial employment opportunities in both developed
IN THE and developing countries. By establishing subsidiaries, branches,
and factories in different regions, they create jobs that provide
GLOBAL income and economic stability for individuals and communities.
ECONOMY These companies often bring advanced technologies, managerial
expertise, and capital investment, leading to increased
productivity, efficiency, and competitiveness within local industries. The presence of MNCs
can also encourage the growth of local businesses through supply chain linkages, fostering
entrepreneurship, and expanding market opportunities.

Multinational corporations are the driving force of the global economy Since its
appearance in the late nineteenth century, it has been an important turning point in world
economic activity Which was prevalent at that time, and today these companies constitute the
influential force in making events and events economic, social and political transformations
in the world and thus it has become Those companies controlled and controlled by the most
important economic activities in the different parts Ansar for production, especially work,
and the lax money, and these companies are the power of the main payment. For the
phenomenon of worlds, which is the essential specification of his economic development
process in most of the world, and these companies are practiced by their work through a
contract with a contract of organizational corps that are implicated in the global production
processes and represents the appearance of these companies The goodness of the organization
of economic activity in the economic and advanced economies through the control of these
companies Most of the economic activity in the world is chosen in all of this organization,
instructions, the marking of the regional limitations, and the national leadership of the world
of the world Those states, as this economic activity was very important by the number of
countries in the world, and this is what they indicated. There are many reports issued by
international organizations concerned with this matter, and this has been demonstrated The
role that these companies play by controlling the global economy and its financing
institutions.

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 According to the intellectuals, the development of the global economy and our seat)
has resulted in the role of multiple sexual companies in the global economy (it is based on the
preacher of its benefits) that the multiple sexual companies may have a definition of the
global economy in the world. Its (and this role is evident through the arms It is discussed
from the income of this framework, after the concepts of those companies and their
development are clarified and their characteristics and the effects that these companies leave
on the statements of developing states in a way Transfer technology to the countries of the
different world and this role is an influence on the global economy.

The concept of multinational companies

Many assert that a truly global economy has emerged or is beginning to emerge, in
which distinct national economies, and thus local strategies for national economic
management, are increasingly mismatched. They also assert that the world economy has
become international in its basic dynamics, and has become dominated by The uncontrollable
forces of the planetary market have become its main active elements, and the major forces of
change in it are the multinational companies that have no loyalty to any nation-state, and
which take their position anywhere in the planetary market as interest dictates.

The concept of the multinational company has seen several definitions by many
economists. Some of them define the multinational company as every project that owns or
controls assets and assets - factories, mines, offices, consultancies and the like in two or more
countries, and the activity of these companies extends into all aspects of life. Economic in the
industrial, commercial and financial fields.

Others define them as projects that are small in number and gigantic in size, with direct
manufacturing operations in different countries and a global structure in the multiplicity and
complexity of their production and administrative regions, and their production effectiveness
covers different commodities and different geographical areas.

The United Nations Conference on Trade and Development (UNCATAD) defines it as

an economic entity that engages in trade and production across continents and has in two or
more countries fledgling companies or branches that the parent company effectively controls
and comprehensively plans all its decisions.

As for the scientific and simple definition of the multinational company, it indicates
that it is the company whose branches extend to several countries and achieves a significant
proportion of its large production of goods and services outside its countries of origin,

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through a unified global strategy, characterized by its use of the latest technological
achievements, and managed centrally in Its original habitat.

Activity of multinational companies

The activity of multinational companies varies from extracting primary minerals to

manufacturing products, and from consumer goods such as soft drinks and chocolate to
technological products such as electronic computers and mobile phones to services such as
insurance, exchange, financial services, tourism, visual, audio and print media, and
transportation.

Multinational companies differ not only in terms of the quality of work, but also in
terms of how this work is performed, the technological level, the organizational structure and
the structure of the market that accommodates the products of those companies. However,
there are some common features of many multinational companies that can be used to
describe this phenomenon and characterize the problems these companies create.

Finally, multinational companies aim to create subsidiaries in many countries. One

analyst defined multinational companies as companies that have investments in six or more
foreign countries. He found that such companies represent 80% of all foreign subsidiaries.
For large American companies.(5)

The standards of integration in the branches of activity are embodied in multinational

companies, with the steady increase in the proportion of international business compared to
the national business of the parent company, and the organizational and strategic structure
characterized by a high degree of provisions, with the presence of a multiplicity of
nationalities of owners and managers with influence in making decisions within a framework

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that achieves a high degree of policy consistency within. The company as an integrated
network.

In this sense, multinational companies express deep tendencies of contemporary

capitalist development towards achieving the following:

* Unification of the international trade market by eliminating and continually

weakening national tariff and quantity restrictions.

* Unifying the financial market and international credit.

* Unifying the international technology market through a national movement towards

standardization.

These tendencies express themselves - in reality - through complex and complex

formations, attested by the institutional innovations in the field of international credit, where
multinational alliances arose between banks, and these alliances branched out into various
branches of credit activity and took on extremely numerous and diverse organizational
patterns within the framework of the degree of A high level of unity that has risen to the
formation of something resembling a single nervous system in this area.

The work of multinational companies requires direct foreign investment, as well as the
ownership of economic units (such as services, extractive industries, or industrial equipment)
in several countries. Such investment, as well as indirect investment (investment in financial
portfolios), means the extension of administrative control across national borders. The
international operation of these companies is consistent with liberalism, but it is directly
contrary to the doctrine of economic nationalism and also opposed to government
intervention in the economy.

All the hopes and fears associated with multinational companies are well founded.
Many of them are actually very powerful institutions and have resources that exceed those of
most UN member states. The importance of these companies has increased as foreign direct
investment on a global scale reached $560 billion in 2003.

Characteristics of multinational companies

Multinational corporations tend to be monopolistic, with ownership, management,

production, and sales activities spread over the jurisdiction of several national entities. It
consists of a main center in one country with a group of branches in other countries. The
company's main goal is to secure the lowest cost of producing goods for global markets. This
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goal can be achieved by obtaining the best and most efficient locations for production
facilities or obtaining tax concessions from the governments hosting these companies.

Multinational corporations possess a large pool of managerial talent, financial assets

and technical resources, and manage their giant operations with a coordinated global strategy.
Multinational companies try to expand and maintain their positions in the market through
unification, vertical integration, and centralization of decision-making in the company.
Typical examples of this type of company are IBM, Exxon, Fiat, Nestle, and Toyota.

In addition to the above, multinational companies are distinguished by many

characteristics from the rest of the companies and institutions operating in the global
economy, which are as follows:

- The breadth of the geographical area of its activities:

The importance of this characteristic for multinational companies is embodied in the

fact that it contributes to formulating and drawing strategies on a global level, and in
determining the quantities and types that are produced globally, and at the same time it aims
to achieve a strategy of secure supplies and then maintain the investors’ evaluation of the
company, whose position towards it may be affected as a result. Some of its activities in the
field of exploration, production, or transportation in a region have stopped for one reason or
another.

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 The following table shows the number of multinational companies and affiliated
companies operating in the global economy:

Region Multinational companies Foreign affiliates present in

present in the global the global economy
economy
the world 65000 850000
advanced 49806 94623
countries
Western Europe 39415 62236
European Union 33939 53373
Japan 4334 3321
America 3382 18711
Developing 9246 238906
countries
South, East and 6067 206148
Southeast Asia
Latin America, 2594 26577
Caribbean
west Asia 449 1948
Africa 43 429
Source: UNCTAD, World Investment Report , 1999,Geneva, P 5-6

About 90% of the 100 largest non-financial multinational companies in the world in
terms of foreign assets are based in the important triad of the global economy (the United
States, Japan, and the European Union). More than half of these companies work in the field
of electrical equipment, electronics, automobiles, and the oil exploration and distribution
industry.

These companies play an important role in American production. In 1999, the United
States of America acquired a third of the 100 largest companies, and five of its companies are
in the ranking of the ten largest companies classified according to foreign assets for the year
1999.

Multinational Enterprises and Export Competitiveness

Improving export competitiveness is important and involves challenges, but it is not a

goal in itself, but rather a tool to achieve the goal of promoting development. This raises the
issue of the benefits derived from trade associated with multinational companies, starting
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with improving the trade balance, then improving and sustaining export operations over the
years. Time, and even if foreign direct investments directed towards export help increase
exports, foreign companies also import, and the net foreign exchange earnings may be in
some cases, and they may also record high export values with low rates of value added, and
the issue in all cases is knowing how Host developing countries can benefit to the maximum
possible extent from the assets controlled by multinational companies, and the issue depends
to a large extent on the strategies followed by the multinational companies, on the one hand,
and on the corresponding capabilities and policies in the host country, on the other hand.

Economic and social impacts of multinational corporations

1. Economic impacts of corporate activity

It is not enough to assert that multinational companies only engage in foreign

investment activity, because that is a somewhat incorrect definition, because, in addition to
this aforementioned role, they play an economic and social role that has multiple effects,
especially in Arab countries, and also has political and cultural consequences.

It is known that multinational companies seek to increase their profits by exploiting

natural resources and cheap labor, and they do not care about the importance of the projects
they implement for the national economy or their economic, social, political and cultural
impacts. These companies may focus on depleting a non-renewable natural resource (oil...)
when it is in the national state’s interest not to exhaust this resource. It may be interested in
manufacturing industries, while the state needs basic heavy industries. They do not fully meet
national requirements, simply because they are foreign companies.

Hence, the countries hosting the investments of these companies resort to placing
restrictions on this investment, by linking it to the approval of various government bodies,
after they adapt their investment projects according to standards determined by the host
countries. This is in addition to developing countries racing to provide incentives to
encourage the work of these companies, including:

- Tax exemptions or reduction in customs duties.

- Policies that free companies from restrictions on their profits transferred to the home
country.

There is an attractive method of incentives, which is allowing establishments affiliated

with these companies to import the necessary materials and supplies without being subject to
taxes and fees.
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 There are other ways that host countries resort to by having the subsidiary facility use a
certain amount of local productive resources in its production operations, that is, in other
words, this branch’s positive contribution to the local economy. These companies also pay to
employ a certain percentage of the workforce from citizens of the host country.

2. Social impacts of corporate activity

Economic studies confirm that multinational companies' business is not linked to

national industries in developing countries, but rather to the general policies established by
these companies, which leads to increasing social differences between the group whose
interests are linked to these projects and the majority of the population whose standard of
living is deteriorating, under the dual influence of stagnation in development. The rise in
prices is a result of the close connection with global markets.

This trend often opens the door wide to corruption and other negative social
phenomena. These companies often rely on bribery in order to corrupt politicians and rulers,
force them to accept conditions that are more unfair to their country, overlook legal
violations, or pay a price higher than international prices. These aforementioned companies
also succeeded in purchasing the receivables of senior officials, and recruited significant
numbers of technicians, administrators, businessmen, and professionals to serve them with
high salaries... In sum, multiple companies have social impacts on developing countries,
including Arab countries, the most important of which can be summarized in three points:

- Curtailing the national productive industry and encouraging the emergence of a social group
that lives at the expense of society and has non-productive characteristics.

- Perpetuating corruption, bribery, and low moral values.

- Increasing the gap between social strata, leading to social and political instability.

The role of companies in the global economy

Multinational companies represent one of the most important factors influencing the
movement of the global economy. Since the emergence of these companies in the late
nineteenth century and the beginning of the last twentieth century, they constituted an
important and major turning point in the international economic activity that prevailed at that
time. After World War II, the number of such companies increased and their various branches
in the world increased, as these companies are considered one of the prominent phenomena in
the global economy with a great influence on the policies of developed countries, as their
number increased until in the mid-nineties it became approximately (35) thousand companies
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distributed in the United States of America and Europe. And Japan. The practice of these
companies has been embodied in their activities in the global economy through the growth of
their role in the internationalization of production, services and trade, contributing to the
formation of a free international trade system, accelerating the greater growth of foreign
direct investment and the rapid development of financial globalization. The role or influence
of multinational companies in the global economy can be summarized through the following
points:

1. Emphasis on the global character: Multinational companies played a major role in

influencing mechanisms and the components of the global economic system, which is mainly
represented in the development of organized, transient business performance

Nationalities, which leads to the globalization of the economy, as these companies were able
to transform the world into a unified entity in which communications, transportation, and
information are available. In addition, through those companies, internationalism began to
spread at all levels of production, financing, technology, marketing, and administration,
which gave it a global character.

2. Impact on the international monetary system: Given that multinational companies

possess liquid assets and large and huge international reserves.

3. Impact on international trade. As a result of multinational companies owning a large

percentage of trade volume and international sales movement, their impact will undoubtedly
be great on the system and structure of foreign or international trade through the high
technological capabilities and material and human capabilities they possess.

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Conclusion

Through what was mentioned previously, the researcher believes that multinational
companies are today considered a fundamental force in the global economy in our
contemporary world, as they operate through a complex network of institutional and
organizational structures, and engage in international production operations according to an
integrated global system that puts under its management more than a third of production.
Global supply of goods and services accounts for more than three-quarters of technology and
foreign investment flowing globally. Multinational corporations also reflect a world in which
capital flows and the flow of technology, skills, and cultures have increased, and continuous
changes in the comparative advantage encourage companies to establish their production
facilities in the most advantageous locations on the planet. Some of these benefits include a
large skilled labor force with low wages, proximity to marketing outlets, and tax advantages.

References:

1. Hamid Al-Jumaili, (2004) Multinational Companies in International Production, Crude

Oil News Magazine, Issue (401), February, Abu Dhabi, p. 27.
2. John Edelman Spiro, (1987) The Policies of International Economic Relations, translated
by Khaled Qassem, Jordanian Book House, p. 114.
3. Michael Tanzer and others, (1981) From the National Economy to the Global Economy -
The Role of Multinational Media Companies, translated by Afif Al-Razzaz, Arab
Research Foundation, Beirut, 123.
4. Mona Qassem, (1988) Group video projects and their importance in the global economy,
Economic Bulletin, Banque Misr, Year (41), Issue (1), pp. 53-54.
5. Muhammad Al-Sayyid Saeed and others, (1986) North-South Dialogue and the Crisis of
Dismantling the International Work of the Personal Computer, Dar Al-Shabab Publishing,
Kuwait, p. 120.
6. Muhammad Subhi Al-Atribi, (1977) An Introduction to the Study of Multinational
Monopoly Companies, Dar Al-Thawra for Press and Publishing, Baghdad, pp. 25-35.
7. Paul Hirst and Graham Thompson, (2001) Globalization: The World Economy and the
Possibilities of Control, translated by Faleh Abdul Jabbar, World of Knowledge Series,
Politics Press, Kuwait.
8. The Economic and Social Commission for Western Asia (ESCWA), (2005) Emerging
Developments in the Field of Globalization and Academic Integration, The New Yorker,
p. 4.

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