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Multinational Corporations’ Contributions to Australian Economy Report

Executive Summary

Regulation of multinational corporations is significant towards sustaining the social and economic aspects of the Australian society. Actually, the regulatory authority in Australia should be proactive in its activities to ensure that the interests of citizens are protected through enhancing ways by which multinational companies can serve the social and economic pillars as part of the corporate social responsibility.

Despite the series of benefits that Australia derives from multinational companies, such as improved skills, taxes, and increased employment, there are demerits of globalisation in business. These demerits include unethical business practices, low wages, poor working conditions, and disturbance of the social fabric of the dynamic society. Apparently, there is a need for the Australian authorities to regulate the multinational corporations’ contributions through incorporation of business ethics policies and neo-liberal economic intervention by creating regulations that minimise interference with the free economy.


Purpose and context of the report

The prime principle of globalisation is featured by the interconnected holistic phenomenon. Due to globalisation, the world has become a village in terms of politics, economic endeavours, and cultural interaction. Understanding the position of globalisation in the Australian society requires critical analysis of cognitive values attached to practices, beliefs, and social dynamics which control and align a society towards astute of simultaneously interacting functions at macro and micro levels (Clifford 2009).

In the case of the Australian social and economic environments, the third estate comprising of employees has endured inhuman work environment treatment, unreasonable wages, and abuse of age limit for legal labour provided by some of the international companies that operate in Australia (Caputo 2007). This paper will present two recommendations to the Australian government on how it should regulate the multinational corporations’ contributions to the society and economy.

Background and rationale of the report

In Australia, the government is proactive in regulating the contributions of the multinational corporations to ensure that the economy and the society are at advantageous position. Specifically, the regulation has been implemented through the stringent requirements on corporate social responsibility, labour laws, and balance between economic and cultural aspects of sustainable business, in all sectors of the economy. With the rise in technology and other competitive forces in the modern global production activities, the government of Australia should introduce more stringent policies to guarantee mutual benefits between the citizens of Australia and the multinational corporations. Thus, the rationale of this report is to present a neo-liberal and social-democratic recommendations on the best way to regulate the contributions of multinational corporations to Australian society and economy.

Literature review

Existing views and findings

Social Perspective on Globalisation

The foundation of globalisation in business functions on global integration and its changing patterns that led to the current interdependent and networked of global order. Through the global production, the world is now manifested with the emergence of mass society in terms of social interaction: mass culture, mass welfare, mass consumerism, and mass communication. This institution has promoted cultural interaction and healthy business competition (Friedman 2006). The global culture enables mankind to acquire new skills, technology, and appreciate diversity through the global business regulations in different countries such as Australia.

Economic Perspective on Globalisation

The concept of development has attracted different reaction since “it can be understood as a process likely to happen with economic growth or it could be understood as a dynamic socio-economic process for empowering poor and excluded people” (Haslam, Schafer, & Beaudet 2012, p. 28). Though development is a continuous process, the Third-Way and Neue Mitter models are characterized by the motivation to positively improve the lives of those in the countries where international companies operate in.

These models inspire change and betterment of the target groups. Hence, an unlimited access to improved infrastructure has contributed to competitiveness, efficiency, growth, and increased capabilities of the citizens of the global societies (Cruddas & Nahles 2009). In the process, the social exclusion and inequality may be reduced.

Hidden face of globalisation in Australia

The hidden face of globalisation in Australia is suffering and exploitation of the poor factory workers by the successful international companies that make their products in Australia. These companies engage in unethical labour relations practices such as employing underage workers, paying peanuts to workers, and neglecting their social welfare despite the huge profits they generate from these products.

Due to the unstructured international relationship between Australia and these international companies, labour laws balance is threatened by sudden changes in the social systems of the Australian society introduced by the foreign companies (Lee 2009). This brings about the question of how the local people need to stay together and to attain their needs equitably, without involving in overindulgence, selfishness, and myopia.

Many authors have endeavoured to comprehend the revolutionary implications of neo-liberalism as it continued to evolve in an ordinary arena of business practices within their territorial borders. For instance, Karl Marx expressed these sentiments on alienation and pain in the lower class workers imprisonment by the companies who have the resources to manipulate and twist social, development, and welfare aspects of the Australian workers’ society.

In fact, it is apparent that these companies, drawn from the bourgeoisies and the ruling elites in the developed world of the international community, are thriving in discrimination and exploitation of labour supply to satisfy their selfishness (Gebert 2006). Since they are the masters of labour production tools such as wages, this group, comprising of just a small percent of the society, comfortably sits at the apex of Maslow’s hierarchy of needs pyramid and cannot share the huge profits with the local Australian labourers who are subjected to harsh working conditions to make designer items for other societies.

Internationalization is vital in business management and operations, especially when a company intends to localize production tools such as labour, distribution, language, ethics, and culture in order to fulfil the ‘absolute advantage’ (Friedman 2006). Often, in the contemporary business environment, managers face challenges in line of duty, especially when the survival of a company is directly affected by unfavourable market swings.

The aspects of internalization, stereotyping, cultural classification, acculturation of a company, and how culture affects behaviour and responsiveness in the market for products are incorporated in various international trade theories (Gebert 2006). Foresight is very crucial since it gives a business rough perspective and an overview of the future concerning the expected and unexpected changes and challenges in the product life cycle. Therefore, businesses have to carefully examine and evaluate their past and endeavour to adopt relevant skills that will be relevant for future challenges and responsibilities (Narver 2009).

The international trade theory provides an overview of literature of various meanings with relation to their prospective or viewpoints of different market segments. Besides, it authenticates the ability to look forward into the future in an effort to predict and anticipate various developments before they actually take (McGrew 2007). In addressing the theory of factor endowment, foresight facilitates feasibility in production among international quarters engaged in trade since it focuses on balanced production factors.

In a perfectly skewed labour market, Smith argues that wages are supposed to be determined by the cost of production and total output. Unfortunately, this is not the case. The poorly paid employees of the foreign companies located in Australia are merely spectators of exploitation as though their hands and minds are imprisoned in the dungeon of social classes. Despite the fact they are the majority and providers of labour resources, they are unable to unite and move from mere spectators into agents of quantifiable and desirable change they long to witness in their work environment.

Interestingly, Locke argues that the world has enough resources for everyone when selfishness is locked from imprisoning the human mind (McGrew 2007). Development and perception of an individual are greatly influenced by events in his or her external environment such as the type of income received against labour given and the social welfare fostered by interaction. At present, these are skewed towards fulfilling selfish ambitions of the selfish and myopic global companies in Australia, that accrues huge profits from poorly treated, underpaid, overworked, and sometimes underage workers in Australia, especially from the Aboriginal community.

The neoliberalism school of thought opines that absolute gain comes before relative gains in a relationship between two parties. This belief is assimilated in the game theory to explain and extend on the positive and negative influences that these relationships create at the global level. Due to global interrelatedness, the economic meltdown has caused an imaginable damage in the democratic, business, and social segments. Besides, the mass society has weakened traditional societal values; capitalism revolution weakened aristocratic and traditional values such as socialism and communism in Australia (Parpart, Rai, & Staudt 2008). However, the merits of globalisation supersede its demerits.


Evaluation of the current findings

The first characteristic of the international business system is the existence of different units. Reflectively, Waltz opines that as “long as anarchy endures, states remain like units” (Payne & Phillips 2010, p. 93). In reality, the independent states can be described as autonomous units of business power influence with more or less the same challenges. Waltz concludes that these units generate the rules of operation since their influence cannot be undermined. The second characteristic of the international system is the unique structure of change systems within each independent unit of influence.

The differences in the change system structures “since the distribution of capabilities across the units” (Rajesh 2006, par. 9) may not be easy to classify. The unique structure of change systems in the international system explains business alignment and partnerships among the autonomous state units. Personal gain supersedes the global interest. Specifically, “through trade and/or cooperation, the political relationship within a state will limit its cooperation with other states (Payne & Phillips 2010).

Globalisation is a procedure of overseeing economic and social flows leading to economic association within trading corporations across the globe. Capital flows across borders and organizational structures are created in such a way that companies can respond quickly to changing environments. In the past two decades, technology has significantly become sophisticated, making it easier and economical for people to carry out business across the world (Rajesh 2006).

The driving forces have broken down many physical barriers to worldwide communication which used to limited connectivity between businesses over long distances. Globalisation is a multifaceted recognizable reality, encompassing a wider variety of dimensions (economic as well as social); where almost every measure of world markets and commerce-including the flow of foreign direct investment and traditional business culture-has been restructured with remarkable openness of economic and global views towards a barrier free global village (Read 1999).

The propelling factors for the increasing interconnectivity and independence of the world’s markets and businesses are availability of low-cost highly skilled human resources especially in less developed countries. Also, increased innovations and development in telecommunications and the microprocessor field has significantly reduced the transaction cost of carrying out businesses where the Information technology is a catalyst (Smith, Peterson, & Schwartz 2002). Thorsen and Lie (2012) pointed out the significance of globalisation as free movement of “foreign traded goods and services, capital, technology and labour” (Thorsen & Lie 2012, p. 35).

Further, “public awareness of issues such as human rights, democracy and gender have increased significantly due to greater access to newspapers, radio, television, telephone, computer and internet. These developments have arguably led to improved allocative efficiency that, in turn, enhances growth and human development” (Rajesh 2006, p. 51). Thus, there is a need for creation of neo-liberal and social-democratic policies to guarantee proper regulation of the contributions of the multinational corporations to the Australian society and economy to make the relationship between the state and these businesses sustainable.


Neoliberal approach

Foreign Direct Investment (FDI) is usually a commonly used driving force to attract globalisation in Australia. This is for the knowledge that FDI contributes to the creation of employment opportunities and infrastructure development (Read 1999). The most common strategy used to attract FDI into Australia is to establish a special export processing zones or free trade zones (Smith, Peterson, & Schwartz 2002). Australia is continuously inviting FDI without any study or research thus creating threats to the sustainable development and growth of local industries.

Therefore, there is need to regulate the FDIs in Australia to ensure that domestic companies can compete with the multinational corporations. Reflectively, globalisation has influenced the dramatic increase of FDI inflow in Australia and accelerated the role of the economic growth. However, the allocations of FDIs are not always smooth in Australia as such FDIs bring hypothetical development rather than real life scenario (Rajesh 2006). Therefore, regulations of the FDIs will put Australia in a competitive edge.

Social democratic approach

The Australian government should implement further regulations on the ethical management aspect of globalisation to protect its citizens from unethical business practices such as poor working conditions and unstable labour practices. This recommendation will attempt to incorporate a sense of honesty, integrity, and truthfulness in duty performance and embracing the dynamic Australian culture by multinational corporations (Smith, Peterson, & Schwartz 2002).

The proposed change will also guarantee that cultural values and conventional strategies are proactive in facilitating the creation of an imperative environment for interactive business despite differences in business variation and divergent insight (Thorsen & Lie 2012). Thus, the need for an ethical connection between Australian cultures and multinational corporations is important to ensure that their contributions to Australian society and the economy are sustainable.

Reference List

Caputo, R 2007, “Social Theory & its Relation to Social Problems: an Essay about Theory and Research with Social Justice in Mind.” Journal of Sociology & Social Welfare, vol. 34, no. 3, pp. 11-14.

Clifford, N 2009, “Globalization: a Physical Geography perspective.” Progress in Physical Geography, vol. 33, no. 5, pp. 5-16.

Cruddas, J, & Nahles, A 2009, .

Friedman, T 2006, The World is flat: The globalized world in the twenty-first century, Penguin, London.

Gebert, D 2006, “Improvement in the context of transformational change: a study of acquisition and privatization in Eastern Europe.” Journal of leadership and organizational studies, vol. 12 no. 3, pp. 7-12

Haslam, A, Schafer, J, & Beaudet, P 2012, Introduction to International Development: Approaches, Actors, and Issues, Oxford University Press, New York.

Lee, J 2009, The empowerment approach to social development practice: building the beloved community, Columbia university press, New York.

McGrew, A 2007, Globalization and global politics.

Narver, D 2009, Cultural Differences: Impacts to International Business Strategy.

Parpart, J, Rai, S, & Staudt, K 2008, Rethinking empowerment: development in a global/local world, Routledge, London.

Payne, A, & Phillips, N 2010, Development, Polity, New York.

Rajesh M 2006, , STWR.

Read, L 1999, I Pencil: My Family Tree as told to Leonard E. Reed, Foundation for Economic Education, Irvington-on-Hudson, New York.

Smith, P, Peterson, M, & Schwartz, S 2002, “Cultural Values, Sources of Guidance, and Their Relevance to Managerial Behavioural: A 47-Nation Study,” Journal of Cross-Cultural Psychology.

Thorsen, D, & Lie A 2012,

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IvyPanda. 2020. "Multinational Corporations’ Contributions to Australian Economy." May 15, 2020. https://ivypanda.com/essays/multinational-corporations-contributions-to-australian-economy/.


IvyPanda. (2020) 'Multinational Corporations’ Contributions to Australian Economy'. 15 May.

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