Multinational Corporations and the Third World

Multinational Corporations and the Third World

This paper will discuss the effects of multinational, or transnational, corporations on the developing countries of the Third World. The first part of the paper will deal with the opposing views which have arisen since the early 1970s concerning these effects, specifically addressing the conflict between the supporters and opposers of the dependency theories. The second part of the paper will examine the effects which have occurred since the 1970s and the various views concerning those effects.

In the early 1970s, a few theories were presented to explain the reasons for the expansion of multinational corporations, headquartered in the United States and Western Europe, into developing countries in Africa and Asia. The traditional Marxist theory said that such expansion was an institutional necessity for the capitalist system; the continued survival of capitalism requires the absorption of the underdeveloped world into the global industrial system as providers of the basic necessities and raw materials. Capitalism could only grow by exploiting weaker people (Barnet & Muller, 1974, p. 128). Not popular with the more conservative economists of the West, the Marxist theory was widely challenged and received little support outside of communist countries.

Another theory was presented by liberal economists which challenged the laissez-faire theories of the traditional capitalist economists, but was not as extreme as the Marxist theory. Known as the dependency theory, this view held that the resources of the poor developing countries were necessary to the plans of the global corporations. These resources (raw materials, cheap labor, and potential consumers) were the source of the finance capital needed for the worldwide expansion of these corporations. In addition, there were links between the corporate view of these countries, as the source of profits and finance capital, and t…

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