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European Journal of Social Sciences – Volume 19, Number 3 (2011)

The Impact of Multinational Corporations on the Nigerian Economy Bonaventure I. Ozoigbo Corresponding Author, Directorate of General Studies, Federal University of Technology P. M.B 1526, Owerri, Imo State, Nigeria Comfort O. Chukuezi Directorate of General Studies, Federal University of Technology P. M.B 1526, Owerri, Imo State, Nigeria

Abstract The paper examines the activities of multinational corporations (MNCs) in Nigeria. It looks at the stand of some Nigerian political economists who view MNCs as one of the determinants of backwardness in Nigerian economy. These economists believe that MNCs are exploitative. According to them, the natural resources of Nigeria should in the first instance be for the benefit and development of Nigeria but this objective is not realized as a result of the exploitative tendencies and practices of the MNCs. The paper also x-rays the nature, objective and operations of the MNCs. It argues that although MNCs have some negative tendencies, however they contribute positively in the areas of technological development and employment opportunities.

Keywords: Impact, multinational, corporations, Nigeria, economy

Multinational Corporations (MNCs) Multinational corporations are business entities that operate in more than one country. 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 (John 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). 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 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. The second structural model is for a MNC 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 MNC 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 MNC includes affiliates, subsidiaries and possibly even 380

European Journal of Social Sciences – Volume 19, Number 3 (2011) some facilities that report directly to the headquarters. Such direct investment means the extension of the managerial control across national boundaries (Gilpin, 1987). Rugman et al (1985), who prefer to use the name multinational enterprises, say that the concept of the MNE is that “the difference between Domestic Corporation and the MNE is that the latter operates across national boundaries”. 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...
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