Effects of MCNs on LDCs, Term Paper Example

Introduction

The Multinational corporations are the current controllers of the world’s economy. In every operation that takes place in the world, the MCNs are either directly or indirectly involved in that operation. For a successful economic and political cycle, every country in the world must not be in the same level. The less developed countries are to provide most of the resources since naturally, the more developed countries lack the natural resources. This is always accompanied by several manipulations from these less developed countries since most of them lack the industries to process their products. Politically, the less developed countries depend on the more developed countries for very many resources. It is due to these factors that the MCNs to take advantage of the LDCs. Outwardly, the MCNs engage in several activities that may appear helpful to the LDCs. These are mostly done in ways that are hardly noticed to give a wider chance for access of the natural resources. The credits that they receive are on the services that appear better to the poorer countries. On the other hand, in as much as the MCNs utilize the materials from the LDCs, lots of advantages come with them. Below are the chosen variables that assess the relationship (Mauro, 2003).

In normal situations, the MCNs are the major financial sources to the LCDs. It is from this relationship that most well developed countries demand more than they give. Taking Libya as an example, it is one of the popular third world countries with oil as a natural resource. In the world, Libya is best known for the production of oil as a natural resource. This country produces two percent of the total oil production in the world. This is worth the highest percentage of its economy since oil is the majorly known natural resource. The former president of Libya that was killed following his staunch stand on the Libyan oil was very economical with the exploitation of the natural resource. Because of lacking several natural resources, the MCNs had to get access of the Libyan oil so that they could sustain their economy. Being the largest country that produces oil as a natural resource in Africa, the MCNs had to use undetected strategies to obtain this oil. Oil is one of the most used fuels in Europe especially in producing automotive fuels. The manipulation of citizens to oppose their government so that the international countries could get this natural resource was the most embraced strategy. The Unites States have oil that can sustain their citizens for the next hundred years. This forced the super power to join hands in the exploitation of this natural resource from Libya, that led to the killing of the country’s president. The Middle East countries are not excluded in this manipulation. The Saudi Arabia being one of the largest oil producers in the world have received aids from the MCNs. In this way, the national governments of the countries that have these natural resources are bribed so that they can give an easier way for exploitation. This is meant to benefit a few people so that a different country can enjoy a natural resource that they do not worth. The MCNs demand more than the economy of the LDCs ever produce (Daniels, 2007).

A number of governments from Africa have had a negative perception about the dealings of the MCNs. Equally; these governments still receive aid from these countries since they still remain the most developed. The MCNs have realized a ready market for consumable products in the third world countries. Products like beverages and other foodstuffs that are mainly found in Africa. Britain is one of the major trading partners with the African countries. Tea that is produced in Kenya is exported to Britain. This product is then made much better than it was or even better than the Kenyan industries could have made it. On importation, the product is then sold at much higher prices to Kenya. Kenya being a third world country gives the British the opportunity to take advantage of this situation for their gain. The market and the profits that they obtain are higher than the amount they used during exportation by a good percentage. The tea leaves are processed to produce cocoa then sold back to Kenya at higher prices. Ghana produces cocoa which is exported then the end product after processing is sent back to Ghana and other countries at higher profits. The deals that these countries come with are mainly to get them more profits (Pawel, 2006).

The investments that are based on the LDCs have many disadvantages than advantages. Annually, the total amount of capital drained from these poorer countries is three times as much as the MCNs earn for the same transaction. These investments benefit more developed countries suppress the poorer countries. The prices of the raw materials that are obtained from the third world countries reduce yearly. The raw materials appear worthless to the industries. The manufactured products have their prices increasing at the same rate that the raw materials are reducing. In processing and manufacturing, no big effects are made to take care of this increase in prices. Most of the funds and profits that are obtained from these businesses are taken back to the investor’s original countries. The advantage is taken on the less developed countries since the investors have noticed that they have no choice but just to use these products. The natural oil that is majorly from Libya has its market in Europe. The United States only trade 4% of the total export. France and Germany combined have 26% combined of the total export. In Africa, the fuel prices keep on increasing every time the market is closed. The closure of the markets performs the magic of reducing the prices of the raw materials from the host countries and increasing the finished products. This has made the African countries and the Middle East, which are blessed with the raw materials to become poorer than they were before any transaction. The industrialized countries benefit more from the misfortunes of the less developed countries. Poverty level in these third world countries increases every year with no hopes of the situation getting better (Macdonald, 2005).

The third world countries constantly receive the international aid. This is majorly from the three largest aid institutions that is, the World Bank, the IFA and the IDA which are the two subsidiaries of the World Bank. After these transactions, the bank has its political preferences that are majorly controlled by the United States. These preferences are helpful to the well developed countries in that they benefit from their row materials that eventually improve the economy of these countries. The funds that are given to these countries worth less than the benefits they gain. The well developed countries have the cash. Their economy was well planned from the onset of their political journey. The lack of natural resources is always their main issue. The collective ideas that they have both from their local countries and the ones they borrow from other countries enabled them to make useful products from these natural resources (Pierre, 2009). Bilateral aid is a system where an aid is given for a specific purpose. Increasing the working relationships of different countries especially the relationship between the developed countries and the less developed has economic, political and the social implications. The companies and the industries that are based in the less developed countries are meant to benefit the more developed countries than the host countries. The typical tableau is that the investors come with their investment ideas to improve the economy of the host countries. Governments have manipulated their citizens using this idea since there are deals that these developed countries make with the specific government officials to allow for this gain. The true idea behind the foreign investments is that they are meant to improve the markets for their original countries. The manipulation of the salience of the foreign investments is laid on the citizens so that they can accept the deals, the deals that do not help them as much as it should. Currently, most third world countries call for these investors since they have been told how the foreign investors positively affect their economy. The economies of the third world countries in a way are worse than it would have been without these investors. Expanding the market for their original countries is the main intention for foreign investments (Daniels, 2007).

The third world countries trade more with the more developed countries and very few times among themselves. On the contrary, the more developed countries trade fairly among themselves and very small percentage with the third world countries. This funny scenario makes the third world countries have the thought that their major trading partners are the more developed countries with which they majorly trade. Out of the total transactions that the more developed countries conduct, a higher percentage of their total trade is among themselves. The poorer countries have their major trading partners just for exploitation. This is majorly to boost the economy of the more developed countries because of the constant exportation of the raw materials. 90 percent of the total trade that the third world countries conduct with the more developed countries is the exportation of the raw materials. Out of the finished products, the best products are traded between the more developed countries and the remaining taken back to the poorer countries. This hurts the economy of the LDCs and improves that of MCNs. After several years of continuous trade with the third world countries, the prices of products increase while the products that they export are done at cheaper prices. This is as a result of constant upgrading of the trade terms. These terms are changed so that they can suit the interests of the MCNs and minimize the benefits of the poorer countries, deteriorating the markets of the LDCs and improving that of MCNs (Pierre, 2009).

The next variable that affects the third world economy is the population. Out of the total population in the world, the third world countries constitute a whopping 46.6%. This explicitly has an effect on the overall economy of these countries. The per capita income of the industrialized countries is much higher than that of the less industrialized countries. In Africa and Asia, the per capita income is 10 to 20% lower than that of the modern countries. This means that the third world countries must depend on the international aid for their survival. Maintaining that population just for a year is requires too much money that those governments can hardly manage. This would force the governments to call for international aids that will further affect their economies. In a case that the population is that high, like in India or Pakistan, the developed countries tend to provide solutions that last a little while and gain a lot from trading with them. As mentioned in the above variable, the major trading partners that the third world countries consider are not the actual trading partners. To the modern countries, the third world countries are simply junior trading partners that are only beneficial to them. This population assists the more developed countries in terms of getting more natural resources, since the MCNs provide help to sustain this population. (Pierre, 2009).

In most companies that are based in Europe and America, working conditions and salaries are much higher compared to what the third world countries offer. Most graduates from the third world countries have resolved to innovation as a way of earning a living. Depending on employment has been a hard task. The European countries and the United States have resolved to use these innovations for their gains. Having known that the third world countries have got the innovations, they give good offers to these individuals and make them their citizens. Most of the citizens in America are not of the American origin. They came from different countries mainly in search of greener pastures in the United States. The resources that they receive are beneficial to the US. The individuals that benefit from this offer always get their huge wages and forget the state of their mother countries. They become parts and parcel of the countries that give the offer. This in turn hurts the economy of the mother countries and gives more gains to the beneficiaries; their new countries. The results of the resources are then sold back to the poorer countries at higher prices (Macdonald, 2005).

The education systems between the third world countries and the more developed countries are different. In the United States, United Kingdom and Canada, the system is the type that focuses on the career of the students. In these countries, the students are well aware of what they will achieve and deliver in the market. Most of the systems in the third world countries generalize every student. Most of them taking the same systems and school subjects while having different interests in mind. Most of these systems were brought by the industrialized countries. In the era of colonialism, the systems of education that are in place were brought by the MCNs. These systems have affected the productivity of the third world countries; mostly in Africa since most graduates learn what is expected of them in their working places while they ought to have known about them in their universities, colleges and technical institutions. Employers have their productivity reduced because of lack of skills. In this manner, the employers would easily prefer working with the graduates who got their degree certificates outside their local countries, most preferably, international.

The shareholders that operate MNCs have the greatest impact on the third world countries systems. These shareholders demand an equivalent amount of return as it was invested. In every normal operation, there are times of improved production and at times it is greatly reduced. This affects the host countries in the means that the products that are sold to them would have higher prices. To successfully achieve this, the normal products that are sold to the consumers who are majorly of the third world countries are replaced by the same product but with a different look. This attracts the customers who would want to try them out making good profits for the demanding shareholders. This earns very high revenues for the owner countries and increasing the expenditure of the host countries increasing the economic gap between two states in business (Westra, 2011).

Technology is another embraced system that has more advantages to the MCNs than it has on the LDCs. In a narrower view, the LDCs argue that technology has opened their eyes to see the new world, the world that never existed before. In real sense, technology has given the MCNs more advantages that it has given to the LDCs. In their view, the less developed countries are an opportunity for a better market. The American and the European citizens embrace technology to market products from their own countries. The most expensive phones and cars are affecting the market systems. Some of the third world countries are capable of producing cars that are good. The major drawback is the corruption of mind that is greatly around the new styles and classes. The lesser developed countries; especially the African countries are after being in the modern class even if it means spending all their money on buying the modern cars. This is improving the economies of the international countries and reducing the ones of third world countries. Buying the local products more than the international products would raise the local economy and make all the countries at an equal level (Pawel, 2006).

In conclusion, the mentioned variables are the greatly affecting the economies of the third world countries. The manipulation, population, political effects, social and economic, technology, competitions, demands and other several variables in the text are the effects that cause third world countries a great havoc. The choices for these variables are from the unseen effects that they have on the third world countries. The poverty level in these countries increases day by day, because of the misplaced priorities and the manipulation from the government. The MNCs have brought several industries, nongovernmental organizations, and other different programs that are helpful to a few individuals who work with them. Most graduates and post graduates from the third world universities prefer working with these companies and organizations because of their working conditions and payments. The effects are felt on the economy of their countries; the benefits are less on the host countries and more on the industrialized countries. This is one of the major causes of poverty (Mauro, 2003).

References

Daniels, J. (2007). International business: environments and operations. Prentice Hall

Macdonald, T. (2005). Third World Health: Hostage to First World Health.. Radcliffe Publishers.

Mauro F. G. (2003). Multinationals, Ideology, and Organized Labor. The Limits of Convergence. Princeton University Press.

Pawe?, B. (2006). Globalization and the Transformation of Foreign Economic Policy. Ashgate Publishing, Ltd.

Pierre, J. (2009) The Pillage of the Third World. Lahore,  Hajvery University Press

Westra, R. (2011). Renewing Socialist Development in the Poorer Countries, Journal of Current Asia, 41(4)