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Multinational Corporations and Globalization: the Pros and Cons



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Multinational Corporations and Globalization: the Pros and Cons 
First, let

s define these two terms. A multinational corporation (MNC) is a 
large company engaged in international production and, usually, sales. The 
largest MNCs - also known as MNEs, for multinational enterprises 

have 
production sites in several or even dozens of nations. An MNC typically scans 
the whole world, or at least substantial regions of the world, for markets, 
production sites, and sources of raw materials. Globalization essentially means 
free movement of goods, services, people, and capital across national borders. 
This creates global markets for goods, services, labor, and capital. However, the 
term globalization has also come to mean something more: economic and 
cultural hegemony on the part of industrial enterprises, such as MNCs, and 
industrialized nations, particularly the United States. Those who oppose 
globalization use the term to describe these negative phenomena and to raise the 
specter of a world controlled by a handful of MNCs. We are discussing MNCs 
and globalization together because they are related. An MNC benefits from free 
movement of goods, services, people, and capital across national borders, just as 
U.S. companies have benefited from that situation in North America. As a 
corporation, an MNC has one main objective 

to make a profit 

and the free 


movement of goods, services, workers, and capital enhances profitability. It 
does that by giving management freer access to the factors of production and 
the ability to make decisions based more purely on cost and revenue 
considerations. Also, MNCs promote globalization by their very existence and 
business practices. When McDonald

s introduces its 

customer experience

and its menu, even in modified form, to another culture, it begins to change that 
culture. When Ford sets up an assembly plant in Brazil, it attracts workers from 
the countryside and changes their economic aspirations, for better or worse. 
Similarly, the agenda of the World Bank and the IMF generally favour freer 
trade 

a force for globalization 

but many developing nations find free trade to 
be a mixed blessing. The key problem in talking about MNCs and globalization, 
aside from the emotions they stir up, is that they are both creatures of the 
industrialized world. That is an undeniable fact, whether you oppose or support 
MNCs and globalization. The poorest nations in the world are not launching 
MNCs. Given that economically powerful entities rarely aim to benefit the poor, 
those who oppose MNCs and globalization 

regardless of how emotionally 
they state their case 

do have a case. 

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