Roles Of Mncs

ASTRI CRISTIN

016201400023

DIPLO 4

At first, trade only operate domestic in order to advance the national economy of each country. However, globalization offers a new solution that is able to bring inter-regional trade, one through Multinational Corporation (MNC) or commonly known as multinationals company. In the process, MNC provides a range of benefits in order to promote the international economy. It then makes the MNC as a non state actor that is very influential in the development of International Political Economy. A multinational corporation (MNC) has facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head

There are positive roles of MNCs , they are;

1. Filling Savings Gap: The first important contribution of MNCs is its role in filling the resource gap between targeted or desired investment and domestically mobilized savings.

2. Filling Trade Gap: The second contribution relates to filling the foreign exchange or trade gap. An inflow of foreign capital can reduce or even remove the deficit in the balance of payments if the MNCs can generate a net positive flow of export earnings.

3. Filling Revenue Gap: The third important role of MNCs is filling the gap between targeted governmental tax revenues and locally raised taxes. By taxing MNC profits, LDC governments are able to mobilize public financial resources for development

Economic and political power held by the MNC can easily influence the decision of the state in making public policies. Another speculation emerged with their ability to lobby bureaucrats to fulfill the main goal of the company through the creation of laws. Thus, various laws in one country can also be said to be dependent on the existence of MNC. However it should be emphasized again that the main orientation of MNC remain on profit maximization.

Like we can see from the study case of Toyota, The Toyota recall related to sudden acceleration problems is further evidence of the limits of the power of government to regulate MNCs. According to a recent New York Times story , the National Highway Transportation Safety Administration conducted six different investigations into complaints of sudden and unexpected acceleration and closed them all with no action. It accepted Toyota 's superficial explanation for the problems, and refused requests to pursue a further investigation. Frequently, the complaints are dismissed or rejected by NHTSA after a limited