The Impact of Multinationals on Economic Growth and Prosperity in Essay

The Impact of Multinationals on Economic Growth and Prosperity in Developing Countries - Essay Example This essay offers a comprehensive review of the influence, exerted by multinational companies, on the growth of developing economies. In the paper, four examples of successful beneficial co-operation between Indian government and multinational companies are provided. Globalisation leads to liberalisation. In economic terminology, governments use the term liberalisation to indicate an open economy system. Governments attract FDI through attractive incentives and subsidies. Multinationals are encouraged to invest and produce goods and services for local and external consumption. There is an unimpeded flow of goods and services between economic jurisdictions. Multinational companies in their activities look for political stability, a strong skilled workforce, and profits, as prerogatives for investment. Countries that attract such investors look at capital investment flow, equity participation, and employment benefits for its workforce. Consumers also benefit from quality international products at low costs. The topic of globalisation became intense in 1990s, when major players began to debate on the benefits developing countries could have from it. Most third world countries were under pressure to clear debts, intense illiteracy, unemployment, poverty and infrastructural development. Most experts were unanimous that most developing countries required foreign direct investment to bail them out of their debts. This could be done only if the countries were willing to share the fruits of investment and provide equal leverage.