MULTINATIONAL CORPORATIONS AND THEIR CONSEQUENCES FOR THE Research Paper

MULTINATIONAL CORPORATIONS AND THEIR CONSEQUENCES FOR THE INTERNATIONAL ECONOMY - Research Paper Example A Multinational Corporation (MNC) is an enterprise engages in Foreign Direct Investment (FDI) which possesses or built facilities, operates and controls value-added undertakings in many countries. A firm is considered an MNC when 25% of its production and services output came from external through trading and services as well as infuse capital, technology, and managerial expertise to undertake production in foreign countries (Spero & Hart, 1997). Economists posit that a company is considered multinational when it has nurtured a number of affiliates or has subsidiaries in other countries; operate in an array of services and operations globally; gather high rate or percentile of assets, revenues, or profits; its human capital, stockholders, and administrators composed of varied nationalities, and their offshore operations are extensive, ambitious, and inclusive of manufacturing, research and developments (Spero et.al.1997, p 117). Often, the subsidiary company got financial and supervisory support from its parent company or may undertake joint venture in the operations. The financial transfer is called by economists as Foreign Direct Investment (FDI) which is aimed at controlling some offshore assets and when it invests capital to a subsidiary in other nation by purchasing an enterprise or by feeding capital to commence a new operation (Spero et.al.1997). Sometimes, MNCs does portfolio investment by buying stock or bonds from a national corporation (Spero et.al.1997). Many MNCs are engaged in extractive industries, manufacturing of technology, banking and finance, and the like, but in its corporate management, they are distinct in their technological capacity, corporate structure and the nature of products and services they introduced to the market (Spero et.al.,1997). Their characteristics illustrate that their profit sometimes is more that the gross domestic product (GDP) in almost 170 nations (Spero et.al.1987, p. 119) because they