Politics in Minutes (2016)

Transnational corporations

Transnational corporations (also known as multinational companies, or simply multinationals) sell their products around the world but tend to have their headquarters in one of the most developed countries, and factories or processing plants in less developed countries where production costs, especially labour, are much cheaper. This is, of course, advantageous to the multinational, but is also beneficial to developing countries, creating jobs, providing education and new skills, improving the infrastructure and generally assisting to develop the country’s economy.

But there are disadvantages, too, not least of which is that the profits from these companies go back to their home countries, and only a little is reinvested. Working conditions are often very poor, since one of the attractions for the multinational is that there are fewer regulations on employment practices in poorer countries. Also, if the company decides to move out, the loss of jobs can cause major social problems.