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The role of multinationals in economic development

Author: TanZuoĦĦQinChuanXi From: www.yourpaper.net Posted: 2009-12-10 14:19:22 Read:
[Abstract] With the development of the productive forces, the international division of the deepening, countries increasingly economic ties. On this basis, further enhance the status of the foreign direct investment in the world economy, an important driving force for promoting economic development. The text mainly Analysis contemporary role of the multinational corporations of the world economy and the economy of the home country and the host country's economy.
[Keywords] multinationals economic development role

Multinational companies (Transnational Corporation, TNC), whose name has experienced international companies, multinational corporations, global companies and multinationals are several variations, originated in the capitalist the sovereign state capital output, now grown for countries to participate in international economic competition means . Multinational corporations are the product of the internationalization of production and capital height, as the main body of the international operations, its meaning is very broad, precisely because of its complexity, yet no one unified concept.
There is no denying that the investment by transnational corporations and their development, whether the entire world, the home country or the host country's economic development will produce a very significant impact. Course, the influence of transnational corporations as a "double-edged sword, able to have a positive impact, but also inevitably bring about a negative impact. Therefore, in this case, we explore the main multinationals role in promoting economic development.

First, multinational companies
role in promoting the economic development of the whole world

Accelerated the process of world economic integration, promoting international economic and technological cooperation and exchanges
Multinational companies as the main carrier of the economic globalization and the driving force to accelerate the process of globalization. Multinational companies through cross-border business activities to achieve the re-integration of the global industrial structure of the world economy from the the national economies simple permutations permutations become multinational companies. The multinational companies operating globalization, internal and network development and deepening of the world between the production, exchange, distribution, consumer, technology and product research and development collaboration relationship. International economic relations in the international production deepened and complicated driving in some countries and regions, deeply involved in international economic and technological cooperation and exchanges.
2. Promote the flow of factors of production worldwide, optimizing the allocation of resources to further accelerate the development of modern productive forces
Factors of production due to the world multinational economic and technological benefits of the same difference in possession of resources, the production of the same product, always flows to effective multinational companies. Multinational companies with strong competitiveness, rely on their own industry, the advantages and benefits of advantages, through the establishment of subsidiaries abroad, in order to obtain the resources to adapt to their own needs, to carry out a global business, gather all kinds of factors of production. At the same time, a number of economically powerful multinational companies usually also excess production capacity, through other forms of investment, trade, processing and transfer to those with cheap labor, abundant resources and vast market countries. This has an important influence for the promotion of the global flow of factors of production, excellent configuration for resources, improve the efficiency of resource use. At the same time, in order to meet the needs of the fierce economic competition, multinational companies strengthen the development and application of science and technology, and constantly improve the technological content of products. Multinational companies have today is the development and application of modern science and technology body, not only to develop, implement science and technology development strategy to face a ball, and the establishment of a large amount of scientific research system, has a highly qualified research team.

Second, multinationals role in promoting the economic development of the home country

Greatly increased the mother country of capital accumulation
In the short term, in the early Foreign Direct Investment, multinational companies in the home country financing will reduce the capital stock of the mother country, in the foreign capital market financing does not affect the capital accumulation of the mother country. But in the long run, the multinational profit repatriation, the investment in the home country of capital accumulation increased greatly.
2. Conducive to the mother country for industrial transfer
Foreign Direct Investment in the process, but also the the industrial transfer process. But the industrial transfer of the developed and developing countries, the impact of different. Multinational companies in developed countries to invest due to the high level of domestic technology, forced by competitive pressures in developed countries, multinational advanced technology into the host country. For developed countries, multinational companies in the mutual investment and promote mutual development of emerging industries, promote the optimization and upgrading of industrial structure in each other.
3 for the home country to obtain cheap and natural resources
Natural resources are the basic elements of economic development, and its distribution is not balanced, some developed countries very scant resources, resource-rich U.S. dependence on imported many raw materials. Therefore, in order to seize and control the main natural resources, multinational industrial sectors of energy and basic raw materials investment. Such as the growth of multinational companies in the United States is rich in mineral resources in Canada, Australia and other direct investment soon, the investment in the mining industry increased from 40% in the early 1950s to 60% in the mid-1970s, becoming the world's oil, iron ore monopoly. Third, multinationals role in promoting the economic development of the host country

1. Promote the formation of the host country capital
In the modern development of economic theory, the capital has been regarded as one of the most important elements to promote economic development. In the contemporary open economic conditions, the economic development of a country or region at the same time on their own and rely on external forces to break through the bottleneck itself closed low rate of capital accumulation. Therefore, the entry of foreign capital, particularly multinational investment to enter conducive to overcome the lack of host country economic development in the capital problem.
2. Improve the research capacity of the host country, and to accelerate the development of high-tech
Scientific and technological progress is an important source of economic development, while multinational companies and the leading force in the world's scientific and technological innovation, technology multinational corporations monopoly advantage of the core content, 70% -80% of the world's technological achievements developed by multinational companies. Multinational companies despite more stringent control of its technology transfer, but the technology diffusion effect still exists, is to contribute to the technological progress of the host country, the host country can be obtained directly by multinational companies invested enterprises in the production and sales of the hardware needed for the production technology and technical information. Multinational R & D activities of foreign affiliates in local technology diffusion effect; same time, multinational companies involved in the local market competition to some extent increase the effects of competition.
3 formed on the employment of the host country to pull
Full employment is another important indicator of economic development. Investment by transnational corporations, whether to take a greenfield investments or mergers and acquisitions, are able to create many new jobs directly to the host country. According to a survey conducted by the United Nations Centre on Transnational Corporations, multinational companies with a wide range of forward and backward linkages, suppliers, vendors and service agents can create jobs. Especially multinationals to invest and build factories in the host country, will promote the development of close ties with the host country with which production supply industry and consumer industries, so as to increase employment opportunities. Branches of multinational companies based in the host country in the the local expenditures material turned over tax, through the multiplier effect, the increase in the national income of the host country, and to promote economic development, and thus indirectly brought new employment opportunities.
4 to strengthen ties with the world economy, expand the host country's foreign trade
The modern theory of international trade advocates each factor endowment advantages States to participate in the international division of labor, the development of competitive industries, in order to achieve the efficient allocation of resources. A country in accordance with the principle of comparative advantage in international trade can achieve a reasonable use of economic resources, conducive to economic growth from extensive to intensive conversion, in order to effectively improve the level of economic development. The international nature of multinational companies with production, sales, the introduction of investment by transnational corporations, is bound to increase the contact between the host country and the world economy.
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