State or Critique Todays charges against the MNCs Essay

State or Critique Todays charges against the MNCs - Essay Example The global liberalization has paved the way for fast expansion and growth of MNC’s. The value added of all foreign affiliates of MNC’s as a percentage of world GDP increased from about 5 percent in the beginning of the 1980’s to nearly 7 percent in 1990’s and to 15 percent in 2000’s. The dominance of MNC’s is very clear when the contribution towards a country is seen. The GDP of most of the nations is smaller than the value of the annual turnover of multinational giants like Ford and General Motors. This allows MNC’s to play a crucial role to shape national and economic policies to their benefits. This is not acceptable as MNC’s induce competition among the existing firms and it encourages free enterprise through technology transfers. They work to equalize the cost of factors of production around the world. Â  When the MNC’s enter the host country, the local enterprises imitate the new technology brought by the MNC’s to improve their production efficiency; this is the direct technology spillover effect. The market competition pressure force the local firms to adopt more advanced technologies, which push the technological progress. In some cases, countries rely on MNC’s for most of their projects. In this case, MNC’s will be a great boon to the Public Sector too. In the case of employee’s salaries, the private sector pays more compared to the public sector and the work practices in private sector are more innovative compared to the routine based work in most of the public sectors. In these ways, MNC’s enrich Private sector as entry barriers are minimal here and starve the public sector due to high political pressures. MNC’s are characterized by high levels of spending and mostly they are inefficient compare to the management of a small firm where each activity is accountable to the core and efficient methods are followed. MNC’s