Multinational Corporations Role In Economic Globalization

Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. Nowadays the economic globalization is growing rapidly. The fast globalization of the world’s economies is mostly because of the rapid development of science and technologies. The key players of the economic globalization is no other than multinational corporations. A multinational corporation is an enterprise that engages in foreign direct investment (FDI) and owns or controls value adding activities in more than one country. It cannot be denied that multinational corporations play an important role in

Multinational corporations have played a leading role in economic globalization. Using capital from developed countries, multinational corporations establish factories in developing countries, where they can access raw materials and labor cheaper. And the finished products are then shipped back to wealthy countries where the market sold. Multinational corporations give powerful influence over local and national governments, often provoking them to potray policies that give advantages to business, instead of ensuring the rights of local people. Thus, economic globalization in the form of multinational corporations can prompt to exploitation of the local labor force, channeling the critical resources away from the country itself into foreign exports, and make the developing countries depend too much on developed or wealthy countries. That is why, there is some concern regarding economic globalization. Economic globalization has successfully increased the gap in wealth between developed and deveoping countries. Other than that, because developed countries’ economy have large sums of wealth available for investment in developing countries, there is concern that foreign direct investment (FDI) may create bubble markets in developing

It is called political risk. For multinational corporations, political risk refers to the risk that a host country will make political decisions that will prove to have adverse effects on the multinational 's profits and goals. Negative political activities can be extremely unfavorable, such as the creation of laws that prevent the movement of capital. The political risk will affect some of multination corporations, or even all of them. However, the multinational corporations can strengthen their activities in host country if they involve in politics. The policy-making strength of the country is thereby weakened, and the relative power of multinational corporations is increased. Basically, if multinational corporations involve in politics, it is either worsening or strengthening them. Therefore, should the multinational corporations involve in politics? This paper opinion is, it is not appropriated for multinational corporation to involve in politics. Although it must be extremely hard for multinational corporation not to involve with government activities, because they always related policies which already made and agreed between multinational corporation and the government. All they had to do is avoid political involvement as much as possible. As this paper has stated before, multinational corporation can has power in policy-making.