The Impacts Of Transnational Corporations On Less Developed Countries

2671 words - 11 pages

The issue of the impacts transnational corporations have on less developed countries has been a controversial and much disputed subject within the field of economics and development studies. Researchers using various models such as the Rostow Development model, Harrod Domar model and the Neoclassical Theory Model, have studied these impacts and have tried to come to a conclusion to this issue. Researchers have also conducted many case studies in order to investigate in depth factors contributing to impacts and whether there are differences due to external factors. The issue has grown in importance over the last decade and this paper attempts to discover whether the impacts are beneficial enough in order to uphold transnational corporation activities in less developed countries. The first section is a literature review, which will consist of a brief clarification of economic development and explain different economic development theories, which will help, evaluate whether activities by transnational corporations help accelerate economic development in LDCs. It will also consist of different scholars definitions of outsourcing, networking and linkages further evaluating the costs and benefits of these activities by transactional corporations. The analysis section will consist of a case study of Nigerian offshore drilling. This case study gives a more depth analysis of the negative impacts TNCs can have on LDCs. Transnational companies are contributing to economic development, showing positive and negative impacts transnational corporations have on host countries through real case studies that have been conducted by other researchers. The conclusion section will consist of an examination of all the research prior to this section to thoroughly display all arguments for and against transnational companies accelerating economic development in LDCs. This step is crucial in order to proceed to the conclusion stage; a SWOT analysis is also used in this section.
Also consisting of a summative text concluding and answering the main question of this study, Can economic development be significantly accelerated in LCDs by TNC’s use of Outsourcing, Linkages and Networking?

Literature Review

In order to examine whether economic development can be accelerated in low developed countries it important to define and identify the characteristics of Economic Development. Economic development is significantly more advanced than economic growth. It is more relevant to measuring improvements in the quality of life in developing nations. Economic development is also concerned with literacy rates, life expectancy, poverty rates and structural changes in the economy.
According to Todaro & Smith 2011, Economic Development can be specified into three objectives of development. The first is ‘Sustaining Goods and Services’; this objective is the increase in supply of goods and services, which also widens the distribution of basic needs such as food shelter, health and...

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