Globalization and Multinational Corporations International Relations

INTERNATIONAL RELATIONS

International Relations: Globalization and Multinational Corporations

Globalization could be defined as companies’ global expansion to reach global consumers with their products and services (Kyove et al., 2021). This has enabled the spread of technology, communication, and employees from one geographical location to another. It was through this method that international trade became progressive. It gave rise to joint ventures, mergers, acquisitions, etc.

Multinational corporations (MNCs) have impacted how globalization has expedited over time. Trade, foreign direct investment (FDI), and other relevant cross-border communication channels have fueled the way business had been operating hardly a decade ago. The growth of a country’s economy where they operate have observed boosting as the transfer of skills and technology has been remarkable.

Two categories of international trade have been seen when MNCs vigorously played their part in globalization: transnational trade and financial trade, which mainly came from technological change (Kenya, 2020). The trading system dramatically changed business operations and amplified the banking and finances of host countries. The governments had to change some of their policies to accommodate the new entrants or create opportunities for their economies to flourish. The market’s intensive and extensive labor makes the economic integration smooth.

Evidence has suggested that this could be the case due to two features of the developing countries’ market: small size and easy obtainability of inexpensive labor (Ferdausy & Rahman, 2009). In developing host countries, the incoming MNCs instigated the furtherance of their economic progress. The technological, as well as financial investments give the economic wheel of developing countries an instant lift. The MNCs that create employment opportunities in developing countries enable people to apply for their jobs. However, another debate is that some MNCs prefer employing their own country’s or company’s employees (home-country nationals or parent company’s employees) in another country to work at international locations (Tan & Mahoney, 2006). Also, the arrival of expertise improves the developing country’s products and services. The consumers notice an improvement and want to spend their money, raising the value bar for the country’s economy again.

The consumers also the improvement due to the increased competitiveness as the local market operators raise their quality as a result of MNCs. The efficiency is enhanced for producing the best products and services for better outputs. Eventually, the tax revenues from MNCs and the improved-efficiency local firms become a powerful source for the development of the developing country.

Some of the drawbacks of MNCs operating in developing host countries include labor exploitation by paying them lower wages than the market rates in actuality. When the rights of these workers are violated, also in the form of abuse, the trade unions cause problems in the smooth running of their business operations (Wijesinghe, 2018). Negotiations blockages are observed when the management tries hard to impose their demands while the workers are not ready to accept them.

Creation of unwanted pollution and being less of corporate socially responsible sometimes land them in hot waters. MNCs’ ethics and morals are questioned because they do not seem to deliver to society what they initially promised. Since the developing countries are weaker and looking forward to growing, they might be ready to compromise on some factors that MNCs take advantage of. It is when MNCs try to enforce their culture on developing countries’ employees and complicate the dimensions of cultural diversity. The dilution of the local richness is somewhat felt by the host country’s employees, which is a major drawback.