One important recent development in the field of industrial organization is the emergence and the growth of multinational corporations.It is noticed that since world war second,giant corporations in the developed countries have been establishing branches or subsidiary companies in other countries,especially in the under developed countries.These are called “multinational corporations”.They are called ‘multinational’not in the sense that the assets are owned by nationals of different countries-generally they are owned by nationals of one country only.But they are called multinationals in the sense that,they control assets in a number of countries.This in a broad sense,the term multinational corporation is used to cover enterprises which control assets-factories,mines,sales and othe offices-in two or more countries.
Generally MNC’s are oligopolists in nature and gigantic in size.According to Prof.Raymond Vernon,a multinational company should have atleast minimum sales turn over of over 100 million dollars a year.Only if this condition is satisfied a company can be included in the list of MNC’s.There are about more than 10;000 large MNC’s in the world today of which atleast 00 are giant MNC’s and among whom,a few are super giants/mega-giants.The MNC’s also have about 50,000 officiates subsidiaries and branches operatin all over the world.
FEATURES OF MNC’S
The MNC’s are large,oligopolistic diversified conglomerate international firms.They are national ownership and global in operation.Sometimes they control a chain of companies under different sovereign jurisdiction.Corporate control is exercised by the parent country via centralized strategic decision making.The MNC’s are engaged in foreign /international production through affiliates or subsidiaries.The MNC’s are known for world-wide sourcing of their material inputs.The employ people of different nationalitiesand so they are said to operate a global pay roll.Though there are several units controller by on MNC,they treat the whole world as its operational area and they attempt to maximize one over all objectivefor all units.Today the MNC’s dominate every important branch of international production,trade finance and technology.
E.Penrose rightly says that the MNC’s constitute a large self governing bureaucracy and a quasi –conspiratorial organization.Though some MNC’s are ethnocentric (home oriented)polycentric (host oriented)and geocentric (world oriented).They as a single class have strengthened the forces of neo –colonialism.
MERITS OF MNC’S
1. MNC’s bring in to a country the much needed capital for developing the domestic country.
2. MNC’s bring with them the advanced technology.
3. MNC’s helps to bring in to the host country the imported machinery or raw material.
4. MNC’s are important source of revenue to the host countries.
DEMERITS OF MNC’S
1. No netbenifit from the operation of MNC’s:MNC’s extracted the maximum possible profit from the less developed countries instead of reinvesting the entire profits in the host countries.Thus we find that the developing countries donot get any net benefit from the operation of the MNC’s.
2. Gain in the matter of technology is only in theory:The technology that are introduced in the under developed countries by the MNC’s are mostly that have been discarded by the parent company in the advanced country.Thus we find that the advantage claimed as getting better technology is only in theory and not in practice.
3. Political danger.
4. Insurrection against neo-colonial dictatorship as in Cuba,Vietnam and so on and
5. Anti-fuedal revolution as in Ethiopia in 1974.In all such cases the socialist revolution arrested the development of neo-colonial capitalism
These are transitions to social formations also exhibits two critical features.One is the serious effort at the structural disengagement from the exploitative international capitalist system ,and towards co-operation with other socialist countries.The other decisive feature of these transitional socialist societies is the effort to make the socialist system of production dominant in the new articulation.