The Pros And Cons Of Transnational Corporations

A transnational corporation is a very powerful actor with a significant foreign direct investment and physical operations in two or more countries. While these corporations have always existed in the world economy, they have become even larger over the past few decades, leaving many to wonder if they are gaining too much power. As with any powerful entity, people have begun to ponder whether these corporations are villains or heroes in the world economy. For some like consumers, companies, and host-country/world economies, the global corporations are heroes. While for others, like workers in poor countries, the environment, and local businesses, they are villains. Consumers around the world have heard of these transnational companies mostly

Being transnational enables companies to focus more on research and development and allows them to improve products. This is due to the company’s worldwide presence and large profit margins. In 2007, the top 2000 transnational corporations invested about $460 billion into research and development, which corresponds to about 80% of global business expenditure (IRI). Along with this, the corporations contribute greatly to integrating technology. They often serve as examples to smaller, local companies who have not yet had the opportunity to upgrade to new technology. Also, they help diffuse technology throughout different parts of the world. For example, General Electric has locations across the globe: Ghana, Nigeria, Colombia, Venezuela, Cambodia, Vietnam, Papua New Guinea, and Saudi Arabia (General Electric). This means the technology used in technologically advanced countries can trickle down to countries who are still developing their corporate presence. The economies of the world and the host countries also benefit greatly from having transnational corporations. They create jobs and wealth around the world. They are more dependable than local firms and are less likely to shut down, ensuring job security (Bernard). This means they are less likely to ship jobs abroad due to them having already stable companies in their host countries. Large corporations also depend heavily on trade and have a heavy

For example, the Niger Delta had over 550 oil spills in 2014 and Royal Dutch Shell and ENI, two large transnational corporations, are to blame (Krause). Their ecosystem is collapsing and people are being forced to move their families and relocate. Nigeria had environmental laws in place regarding the safety of the Delta since 1978, and the catastrophic spills still occurred. These companies move to places where they know the laws are not effectively reinforced and the environment is the one that takes the