The Role of Multinational Corporations

In fact, the world economy is to a large extent orchestrated by the heads of multinational corporations (MNCs) rather than by the heads of government. MNC is a firm that operates in many countries. MNCs typically have their headquarters in one of the industrially developed countries, but many of their plants are located in less developed nations. For example, for decades IBM’s popular personal computer was manufactured in China. In 2005 these production facilities were sold to a Chinese company. IBM now simply sources its “IBM personal computers” from this company. By the 2000s the sales of U.S. owned firms abroad were three times the value of United States exports. That is, three-fourths of production by U.S. firms for the world market takes place outside the United States.

The United States is not the only home base for large multinational corporations eager to expand their operations. Japanese automobile makers have also dispersed their production and assembly operations around the world. North America has become an important destination for Japanese automobile assembly and parts plants, many of which were stated as joint ventures with North America auto-makers.

The powerful role of multinational corporations in the world today is based on a high consumption lifestyle for the world’s industrialized nations and aspirations for increasing consumption in the less industrialized nations. Without high levels of consumption, fewer goods and services would be mass marketed, and there would be more room for local producers. This reality leads many to implicate MNCs in the world’s environmental problems as well as its economic problems.