Effect Of Multinational Corporation On The Economy
(A Case Study Of Anambra Manufacturing Company (Anammco) Enugu Nigeria)
The impact of multinational corporations (MNCs) on the economy is profound and extends across various facets, including employment, innovation, and market dynamics. Multinational corporations play a pivotal role in fostering economic development by creating job opportunities, both directly within their operations and indirectly through their supply chains. Additionally, these corporations often introduce technological advancements and best practices, contributing to innovation and efficiency improvements within the domestic industries they operate in. However, the influence of multinational corporations on the economy is not solely positive. There are concerns about their potential to exploit local resources, exacerbate income inequality, and sometimes engage in practices that might undermine environmental sustainability. Striking a balance between reaping the benefits of multinational corporations’ contributions to economic growth and mitigating potential drawbacks requires comprehensive regulatory frameworks and strategic government policies that promote responsible business practices and safeguard the interests of the local economy and its workforce.
This study is essentially an empirical inquiry into the impact of multinational corporations on the economic development of Nigeria. A case study of ANAMMCO Enugu. The researcher is trying to find out exactly the roles of the multinational firms in the economic development of Nigeria. Whether they as helpful as they appear to be or whether they are solely responsible for the exploitation of Nigeria or as an agent of under development in Nigeria.
The researcher will make use of primary data collection such as interviewing some knowledgeable people in the organization and distributing questionnaires among different cadres of ANAMMCO Enugu. The researcher will also make use of secondary data collection such as review of related textbook Journals, newspapers, magazines, periodical etc. of which the conclusion will be based on the data collected.
The researcher is supposed to carry out this work to its grass root but given limited time and the resource available the study will be limited to ANAMMCO Enugu. Equally as a student, severe academic demands compete for limited time available for carrying out this research work.
In order for the objective of the study to be achieved, measures for indiginization can be under taken by Nigeria so as to make the economy self reliance. In view of this foreign construction contractors should be disbanded and indigenous construction contractors should execute construction jobs.
Title
Title page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
CHAPTER ONE:
INTRODUCTION 1
1.1 Background of the study 4
1.2 Organization of the study 5
1.3 statement of problem 6
1.4 Purpose of study / objective 6
1.5 Research question 7
1.6 Research hypothesis 8
1.7 Scope and limitation of the study 8
1.8 Significance of the study 8
1.9 Definitions of term
CHAPTER TWO:
LITERATURE REVIEW 10
2.1 Origin of multinational corporation 16
2.2 A review of pre colonial Niger 19
2.3 The origin of Multinational Corporation in Nigeria 21
2.4 Classification of Multinational Corporation in Nigeria 24
2.5 Review of indigestion programme in Nigeria 28
2.6 The evaluation of indigestion decree in Nigeria 32
CHAPTER THREE:
RESEARCH METHODOLOGY
3.1 Research Design 36
3.2 Sources of data 36
3.3 Questionnaire design 37
3.4 Data treatment techniques 38
3.5 interview question 38
CHAPTER FOUR:
PRESENTATION ANALYSIS AND INTERPRETATION OF DATA
4.1 presentation and analysis of data 39
4.2 Techniques applied 49
4.3 hypothesis testing and proofing 49
CHAPTER FIVE:
FINDINGS CONCLUSION AND RECOMMENDATION
5.1 Summary of findings 56
5.2 conclusion 57
5.3 Recommendation 58
Bibliography 61
Appendix
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Based in part on the development of modern communications and transportation technologies, the rise of multinational corporation was totally unanticipated by the classical theory of international trade as first developed by Adam Smith and David Ricardo. According to this theory which rests on the doctrine of comparative advantage each nation should specialize in the production and export of those goods that it can produce with highest relative efficiently while importing those good that other nations can produce relatively more efficiently.
Underlying this theory is the assumption that white good and services can move internationally factors of production such as capital labour and hand are relatively imniobile furthermore the theory deals only with trade in commodities; it ignores the role of uncertainty economies of scale and technology in international trade and is static rather than dynamic.
Contrary to the postulates of smith and Ricardo, the very existence of multinational corporation is based on international mobility of certain factors of production. Capital raised in London on the Eurodollar market may be used by on wise based pharmaceutical firm to finance the acquisition of equipment by a subsidiary in Brazil. It is the globally world innate allocation of resources by a single centralized management that differeciate the multinational enterprise from other firms engaged in international business. Decision regarding market entry strategy, ownership of foreign operations and production marketing, and financial activities and made with an eye to what is best for the corporation as a whole. The true multinational corporation can be characterized by its emphasis on group performance rather than of its individual components.
At the center of the debate on globalization one the multinational corporations giant actors who think and act globule. Their exetence is often associated with the phenomenon of globalization itself. These actors have gained power visibility and influence at all levels, and one determinant to the setting and implementation of the “ global agenda”. MNCS have created a massive wealth and propelled high technological development. However, their global role their increased economic and political power especially felt in developing countries of which Nigeria is among ) their strong influence in shopping international rules and their lack of transparency and democratic control has put them under severe scrutiny.
Infact the mention of multinational corporation usually elicits mixed reactions. On the one hard, MNCS are associated with exploitation and ruthlessness. They are criticized for moving resources in and out of a country as they strive for profit without much regard for the country social welfare Varity Corp a Canadian multinational firm. Was criticized for its action in 1991 to relocate its headquarter from Toronto to the united states (Buffalo) in order to take advantage of U.S Canadian Free Trade agreement. “For a long time India referred MNCs as agents of neocolonialism.
On the other hand MNCs have power and prestige additionally they create social benefit by facilitating economic balance. As explained by Miller “with resources capital, food and technology unevenly distributed around the plannet and all in short supply, an efficient instrument of quick and effective production and distribution of a complex of goods and services is first essential.
According with the UNCTAD (United Nations conference on trade and development) more than two thirds of the world trade involve at least one multinational half of which occurs within the same multinational around the world. The worlds 44,508 MNCs manage some 280,000 affliates all over the world.
With regards to Nigeria economy there some 3,000 of them having their foreign direct investment either in manufacturing or service industries. Their emergency with regard to Nigeria economy dated back to the history and activities of the Royal Niger company. Of which today in Nigeria they have increased much more in number. These multinational corporations while Nigeria in a way opportunity of gening what they did not have from foreign country, but the issue is that did they create opportunity with some part of the produce of Nigeria industry employed in a way in which Nigeria have greater advantage.
1.2 ORGANIZATION OF THE STUDY
This project is organized in five chapters. Chapter one is an introduction to the study covering such issues as:
i. Background of the study
ii. Organization of the study
iii. Statement of problem
iv. Purpose of the study
v. Significance of the study
vi. The scope and limitations of the study
vii. Research question
viii. Research hypothesis
ix. Definition of terms
Chapter two presents the literature review which covers such issues as:
i. Origin of multinational corporations
ii. A review of pre colonial Nigeria
iii. The origin of multinational corporation in Nigeria.
iv. Classification of multinational corporation in Nigeria
v. Review of indigenisation programme in Nigeria
vi. The evaluations of indigenisation decree in Nigeria
Chapter three presents the research design and methodology of the study. The sources of data collected for analysis. It is also with the way the questionnaire were distributed and treatment of data.
The data get from the research survey were analyzed and interpreted in chapter four: the similar question on both questionnaires were copperas.
Finally the summary of findings conclusion on the research and recommendation made by the researcher are all in chapter five.
1.3 STATEMENT OF PROBLEM
Economic and political development are the goals of modern state. The yearning for these goals has in recent times dominated the literature of the economics of the developing Nations of which Nigeria is one. The present lopsided arrangement of the worlds capitalist order which the third world economies are its periphercial components constitutes a major obstacle to the economic and political development of these new nations in general,.
Inspite of withdrawal of the European power from their former colonies, that is since the granting of independence to the new nations, international capitalism has devised new and more subtle forms of economic development of these nations. There exists an unequal exchange between the centers and periphery nations of the world establishing various form of linkages between the two. These linkages operate through a system of patron client dependency relationship negated autonomy or tend to perpetuate under development.
As a result of the logic of history of European colonization the colonialists handed down to us an economy largely dominated by foreign multinationals. These multinationals are so deeply rooted in the third world that many authors agreed that, it is they (multinationals) who decides where to apply science and technology who devides which industry to develop as directed from oversea headquarters.
With special 2yerence to Nigeria situation the multinationals have reared up a modern political economic elite who not only terms of ideological perspectives, entrepreneurial orientation and economic through, think and behave like their foreign masters they also derive power from extol their value system and because they are in their payroll can not oppose them but rather promote their economic interest.
The problem posed is “How can Nigeria economy achuieve economic independence under this present foreign dominated economic situation?
1.4 PURPOSE OF THE STUDY
The primary objective of this study is to evaluate the impact of multinational corporation on economic development of Nigeria. In doing this, the researcher investigate the operation of multinational corporation with a view to determine:
i. The level of employment of indigerous skilled manpower
ii. Extent of use of local materials
iii. The level of profit made
iv. Their impact on question of transfer of technology
1.5 RESEARCH QUESTION
The pertinent question to ask here is what exactly are the roles of the multinationals firms in economic development of Nigeria? Are they as helpful as they appear to be or are Nigeria and as an agent of under development in Nigeria? Can Nigeria be truly independent when it’s mining, trading, banking and insurance companies, construction and distribution system are controlled by these foreign firms? Did these foreign QE1ZVVfirms contributed to the problem of unemployment existing in Nigeria or not? Did they help in improving Or worsening the balance of payment in Nigeria? These among other questions are some of the questions that this study seek to provide answers for.
1.6 RESEARCH HYPOTHESIS
With available statistical and empirical data, this researcher was able to propagate the undermention hypothesis
i. H0 the level of employment of indigenous skilled manpower is inadequate
ii. H1 The level of employment of indigenous manpower is adequate.
2i. H0 Extent of local raw material used is not enough
H1 Extent of raw materials used is enough
3i. H0 The level of profit made is excessive
ii. H1 The level of profit made minimal
4i. H0 Multinational corporations do not necessarily transfer technology.
ii H1 Multinational corporation do necessity transfer technology
1.7SCOPE AND LIMITATION OF STUDY
This study is strictly restricted to the effects of multinational corporation on the Nigeria economy as it is practiced in Anambra manufacturing company (ANAMCO)Enugu. It studies the impact of multinational corporations operating in Nigeria. The limitation of study are mostly the funding and the time limit given the completion of the study.
1.8 SIGNIFICANCE OF STUDY
This study is significant because it tries to assess how multinational corporations affect national development strategies and to explore how they enhance the achievement of Nigeria economic independence.
Beside the findings will serve as a guide to policy makers for regulating the operations of multinational corporations, moreover, it will enable them to get feedback information regarding the effectiveness of their regulatory policies, with these they can improve on the subsequent policy formulation and planning. The study will also provide a database for future research work
1.9 DEFINITION OF TERMS
1. Multinational corporation: A multinational corporation may be defined as a company or group of companies with subsidiaries in more them one country. They owns (in whole or in part) control and mange income generating asset in than one country.
2. Global corporation: A group of people having authority to operate as a single unit with separate legal existence affecting the whole world.
3. Corporate planning: This is the establishment of objectives and formulation evaluation and section of polices, strategies, tactics anfd action requirement to achieve an objectives.
4. Globalization as a phenomenon is the most evident in the conver gence in trade, finance and information flows acrosss national bounduries.
5. Indigenous skilled man power This refers to the number of people working or available for work who are skillul and belong to a place naterally.
6. Neocolonialism: Thiss means control by powerful contriess of former colonies or less developed countries by economic pressure.
7. Acquisition: Has been defined as a series of transition whereby a person (individual group of individuals or company) acquire control over the assets of a company either directly by becoming the ower of those assets or indirectly by obtaining control of the management of the company.
8. Subsidiary: It smiply means a company whose another company acquired more than 50% of that company shares.
Effect Of Multinational Corporation On The Economy:
Multinational corporations (MNCs) can have significant effects on the economy of both their home countries and the countries in which they operate. These effects can be both positive and negative and can vary depending on various factors such as the size of the MNC, the industry it operates in, and the economic policies of the host and home countries. Here are some key effects of multinational corporations on the economy:
Positive Effects:
- Job Creation: Multinational corporations often create jobs in the countries where they operate. This includes not only direct employment within the company but also indirect employment in related industries such as suppliers, transportation, and services.
- Economic Growth: Multinational corporations can stimulate economic growth by investing in new technologies, infrastructure, and production facilities. This, in turn, can lead to increased productivity and higher GDP.
- Transfer of Skills and Technology: Multinational corporations bring with them advanced technologies, management practices, and skills that can benefit local employees and businesses. This can lead to the development of a more skilled and educated workforce.
- Access to Global Markets: Multinational corporations often provide local businesses with access to global markets through supply chain linkages, which can boost exports and generate foreign exchange earnings.
- Tax Revenue: Multinational corporations can contribute to government revenues through corporate taxes, which can be used to fund public services and infrastructure development.
Negative Effects:
- Income Inequality: Multinational corporations may exacerbate income inequality within a country. High-paying jobs within these corporations are often held by expatriates or the local elite, leaving many local workers with lower-wage jobs.
- Resource Exploitation: Some Multinational corporations may engage in resource extraction without adequate environmental or social responsibility, leading to environmental degradation and harm to local communities.
- Tax Avoidance: Some Multinational corporations engage in tax avoidance strategies by shifting profits to low-tax jurisdictions, which can deprive host countries of much-needed tax revenue.
- Market Dominance: Large Multinational corporations can dominate local markets, making it difficult for smaller local businesses to compete. This can stifle entrepreneurship and innovation.
- Volatility: Multinational corporations can contribute to economic volatility when they decide to enter or exit markets, potentially leading to job losses and disruptions in local economies.
- Cultural Impact: The presence of Multinational corporations can influence local culture, potentially leading to the homogenization of cultures and a loss of cultural diversity.
It’s important to note that the impact of Multinational corporations on an economy can vary widely depending on the specific circumstances and the policies in place to regulate their activities. Governments often seek to strike a balance between attracting foreign investment and protecting the interests of their citizens and domestic industries through various regulatory measures and incentives.