1.1 BACKGROUND TO THE STUDY
the years, Multinational corporations (MNCs) have been a source of controversy
ever since the East India Company developed the British taste for tea and a
Chinese taste for opium (Stopford, 1998). A typical multinational corporation
(MNC) normally functions with a headquarters that is based in one country,
while other facilities are based in locations in other countries. In some
circles, a multinational corporation is referred to as a multinational
enterprise (MNE) or a transnational corporation (TNC) (Tatum, 2010). They enter
host countries in different ways and different strategies. Some enter by
exporting their products to test the market and to find whether their existing
products can gain sizeable market share. For such firms, they rely on export
agents. These foreign sales branches or assembly operations are established to
save transport costs because there is a limit to what foreign exports can
achieve for a firm owing mainly to tariff barriers and quotas and also owing to
logistics or cost of transportation. Most of the firms are encouraged by the low
wage rates and other environmental factors. To meet the growing demands in the
foreign countries, the firm considers other options such as licensing or
foreign direct investment which are critical steps. Some continue with export
even when they have settled for the foreign direct investment option. Every
step takes strategic planning and is motivated by profit through sales growth.
The idea of multinational corporations has been around for centuries but in the
second half of the twentieth century multinational corporations have become
very important enterprises. Tatum (2010) proposes that multinationals operate
in different structural models. The first and common model is for the
multinational corporation positioning its executive headquarters in one nation,
while production facilities are located in one or more other countries. This
model often allows the company to take advantage of benefits of incorporating
in a given locality, while also being able to produce goods and services in
areas where the cost of production is lower (Ozoigbo and Chukuezi, 2011). The
second structural model is for a multinational corporation to base the
parent company in one nation and operate subsidiaries in other countries around
the world. With this model, just about all the functions of the parent are
based in the country of origin. The subsidiaries more or less function
independently, outside of a few basic ties to the parent. A third approach to
the setup of an multinational corporation involves the
establishment of a headquarters in one country that oversees a diverse
conglomeration that stretches to many different countries and industries (Tatum
2010; Robinson 1979). With this model, the multinational corporation includes
affiliates, subsidiaries and possibly even some facilities that report directly
to the headquarters. Such direct investment means the extension of the
managerial control across national boundaries (Gilpin, 1987). While
institutions are important for economic development, particularly in resource
rich countries, the interaction between multinational corporations and host
country institutions is not well understood (Wiig and Kolstad, 2010). There is
a risk that multinational corporations facilitate patronage problems in
resource rich countries, exacerbating the resource curse. Multinational
corporations (MNCs) in service industries have given this sector's large and
growing impact on the global economy (Goerzen and Makino, 2007). The Marxists
view the emergence of the multinational corporations as a historically
progressive aspect of capitalism in the process of developing, at international
level (Gilpin 1987; Stopford 1988). In all these views both Marxist and
non-Marxist, the common basis is productive activity in more than one social
formation. Another point to be noted right away is that in a social formation
there may be many multinationals with different nationalities and also many
corporations of the same nationality. In a social formation where there are
many multinational corporations
from different nations, there are higher possibilities of conflicts than where
they are mainly from the same country. Activities of the multinational corporations
in Nigeria have generated a repulsive reaction from many economic theorists
like (Onimode 1982). Onimode(1982) went ahead to regard multinational corporations
as monsters that have consistently and systematically stultified economic
development in various parts of the world. The merits of the multinational corporations
in Nigeria, the consequences of economic exploitation of multinational corporations
in Nigeria and suggested ways for restitution will be discussed in this study
while examining their role towards economic development in Nigeria.
1.2 STATEMENT OF THE PROBLEM
of the multinational corporations operate by seeking and securing the opportunity
for environment that has least cost of production of goods for world markets.
This goal may be achieved through acquiring the most efficient locations for
production facilities or obtaining taxation concession from host governments. This
has been looked upon by many has counterproductive to the host country. Though multinational corporations have
contributed in terms of job creation but many of the employees of most
Multinational Corporation are poor remunerated. However, the researcher is
evaluating the role of multinational corporations towards economic growth of
1.3 OBJECTIVES OF THE STUDY
following are the objectives of this study:
examine the role of
multinational corporations towards economic growth of Nigeria.
2. To identify the factors determining
the growth and success of multinational corporation in Nigeria.
3. To examine the demerits of
multinational corporation to their host country.
1.4 RESEARCH QUESTIONS
is the role of multinational corporations
towards economic growth of Nigeria?
2. What are the factors determining the
growth and success of multinational corporation in Nigeria?
3. What are the demerits of Multinational
Corporations to their host country?
Multinational Corporations have not
contributed to economic growth in Nigeria.
Multinational Corporations have
contributed to economic growth in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The following are the
significance of this study:
outcome of this study will be useful to government of Nigeria and the general
public on the role of multinational corporation in the economic growth in Nigeria.
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
study on the role of
multinational corporations towards economic growth of Nigeria will cover how
the multinational corporation has affected the economy of Nigeria.
LIMITATION OF STUDY
Insufficient fund tends to impede the efficiency of the researcher in sourcing
for the relevant materials, literature or information and in the process of
data collection (internet, questionnaire and interview).
researcher will simultaneously engage in this study with other academic work.
This consequently will cut down on the time devoted for the research work.
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