Multinational Companies: A Curse to Developing Countries?

Posted on January 20, 2010 in Business and Economy

Thasomini Palaniyandy:

In this twenty-first century, multinational companies have become the central institutions of developing nations. The government of a country should be concerned about food security, industrial production and other commodities that the country needs for its citizens. These concerns encourage developing nations to implement transnational corporation to fulfill their necessities.

Globalization connects people from all over the world, specifically, through advance in technology and transportation. Removal of trade barriers encourages multinational companies to start new branches in developing nations. Although multinational companies have become ubiquitous in the developing world, there has always been an uncertainty about them, in both positive and negative ways.

Some people think that globalization plays a major role in the progress of developing nations because of the presence of these companies. Definitely, they are not the basis for the progress of developing countries. Multinational companies’ presence has more serious negative impacts on developing countries’ labor rights, human health and economy.

Peoples’ common concept is that multinational companies’ existence in developing countries provides employments to the populace. In this globalized world, the integration of these companies allows people to earn money by on own, without relying on others. However, people, forget to consider labor exploitation, where labors receive low wages, work in hazardous environment without protection, and are deprived of labor rights. For instance, women perform two-thirds of all work, if it includes unpaid labor, but they receive only ten percent of the total wages paid worldwide. People consider globalization as a tool for the development of women. If globalization provides a better environment, why are women still getting low wages and are treated as slaves?

These global companies are profit minded and they search for cheap human power, exploiting laborers’ rights in developing countries, especially of women’s by giving them fewer wages and by misusing their rights. Thus, presence of multinational companies is promoting the existence of a callous environment for employees in third world nations.

Next, in developing world, food selling companies are omnipresent, which creates a general perception among people that it will make life easier. Globalization leads multinational companies to promote consumerism. There are many fast food companies, such as Mc Donald’s and KFC, in the developing world that provide alternative foods and makes life easier. However, does anyone notice the consequences of this consumerism? People consider fast food easy, and become addicted to it, which is unhealthy. Multinational corporations promote a certain kind of consumerist culture and spread western lifestyle among the people of developing countries; 115 million people suffer from obesity-related problems as well. The consequences of obesity for adults are well known. Obesity increases mortality from many causes, including cardiovascular disease and cancer. As a result, fast food companies are not making life easier, but they are also making death easier and life miserable in developing countries.

Finally, it is said that existence of multinational companies mitigates poverty in developing nations. Most of the countries are involved in free trade, and they exchange commodities with each other. As the trade barriers are reduced, the rich nations dump cheap products into poor countries, and the multinational companies act as catalysts for this process. Conversely, the process of globalization has exploited manufactures in developing countries, and has caused massive disruptions in living conditions.

As multinational companies have emerged in developing countries, local producers have to compete with these large companies, adversely affecting the local economy. Moreover, these multinational companies also use the national resources of these developing nations such as natural resources, infrastructure and human power. For example, some companies are making furniture by destroying forests in developing countries, which devastates the natural environment and affects the local furniture producers as well.

In conclusion, globalization challenges the progress of developing nations by adversely affecting the life of labors, the nations’ health and economy. Multinational companies’ existence in third world nations has many drawbacks, which are often disregarded by people. As rich nations utilize developing countries resources, the present form of globalization must be changed and developing countries must free themselves from the grasp of multinational companies for real growth.


BBC women’s hour. “Women and Globalization.” BBC Women’s hour. cok/rad io4/women hour/.Accessed June 22,2009.

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Neidik, Abbey. “Coca Cola Conquest.” Microfilms Inc, 1998.

Reynaldo, Martorell. “Obesity.” The Ifpri. February 11,2002. 05_07.htm(accessed June 24,2009).

Supp, Barbara. “Quite Revolution.” (accessed June 14, 2009).