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Multinational Corporations and Its Relations Essay

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Updated: Apr 3rd, 2020

Current studies show that at least a hundred stable economies exist globally and it is surprising to note that fifty-one of them are multinational corporations while just forty-one are states. The sales of the two-hundred best performing corporations amount to a quarter of the global economic activity meaning the revenues of just two-hundred multinational companies are greater than the economies of all states combined globally, including the powerful ones, such as the US, Britain, China, and Canada.

Research suggests further that global corporations are the largest employers since they are known to produce the best CEOs depended upon in advising governments on financial performance. The American institute for policy engaged in an extensive research to establish the exact number of multinational corporations and their global influence1. The researchers found out that over forty-thousand companies exist, with branches in various countries.

For instance, it was established that Philip Morris Company has a financial strength that surpasses that of New Zealand. The companies are never interested in helping the local poor instead they have devised new systems, including interlocking production, consumption, and financial arrangements, which serve only one purpose of fulfill the interests of the few rich individuals while the rest of the global society languishes in extreme portray.

From this analysis, I take the stand that global corporations have structural powers, which are misused in sustaining a defective economic system that does not respond to the needs of the poor2. For instance, the recently global financial system challenged many states forcing them to bail out their best performing local companies. It is surprising to note that the structural powers of MNCs helped them in sailing through the hard economic times that faced many actors, especially governments.

Multinational corporations are blamed for enhancing social and political problems, cultural insensitivity, and environmental degradation mainly because they are in a position to influence decisions. Even though a number of realist scholars are of the view that the new structural powers of MNCs are insignificant without the existence of the state, a number of MNCs are very powerful to an extent of shaping both local and foreign policies.

For instance, a number of American MNCs force the home government to slap economic and political sanctions to a non-cooperating state in the third world, especially the one that fails to adopt liberalization policies demanding for the opening up of markets.

I support the view of liberalists that appreciates the fact that states are important in enhancing business interactions, but their role is minimal, as far as business operations are concerned. Scholars holding this view suggest further that the state only plays a major role of providing an enabling environment that allows people to fulfill their objectives3.

In this case, multinational corporations have adequate powers to control the sectors and the industries in the global economy. In fact, powerful multinational corporations exist across the world with adequate powers to influence the policies made both locally and internationally4.

It is concluded that multinational corporations have adequate structural powers that are often employed effectively in influencing the quality of decisions both locally and globally. Even though realists are opposed to this idea, the fact remains that MNCs hold enormous powers as far as global decision-making is concerned.

Footnotes

1 John Dunning, An overview of relations with national governments, New Political Economy, 3.2 (1998): 283.

2 Peter Dicken, Global shift: Mapping the changing contours of the world economy (London: Sage, 2011): 23.

3 Coe Neil, Economic geography: A contemporary introduction (Malden: Blackwell Publishing, 2007), p. 62.

4 Andrew Walter, “Do they really rule the world?” New Political Economy, 3.2 (1998), p. 289.

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