Question

The role of transnational corporations in the world economy.

Answer 1

The growth of international demand and foreign direct investment delivery are the basis for the rapid development of TNCs in the world economy. Entering any nation into the TNCs enables the development of diverse new opportunities to draw capital and enter international markets.Transnational companies play an significant role in the global governance structure that involves their economic activities, collaboration with domestic and foreign governments, the increasing influence of international organisations, environmental and social conditions in the areas where they operate.

TNCs are essential economic agents that influence the course of our lives and the manner in which social problems can be solved. We depend on the conditions established by governments and international organizations, which form the legal basis for their activity, protect property and investment, lay down rules for regulating environmental protection, labor relations, social security and setting global trade conditions Whatever their degree of growth, the presence of transnational companies in the global economy is growing.

Foreign direct investment is now considered a panacea to reduce poverty and drive growth but the truth is more nuanced. Although a few countries have gained greatly from foreign investment in terms of economic development, job creation and poverty reduction, it has made little to no difference at all for the vast majority. In a handful of countries with more developed economies, huge markets and natural wealth, foreign investment has been concentrated. Smaller countries have struggled to attract large amounts of investment, even though they do have all the policies right.

TNCs–is an significant resource for giving industrial countries development and management experience. Most countries in their territories hosting affiliate TNCs in support of their operations and also bid for foreign direct investment. Extensive experience overseeing large organizations helps TNCs workers to manage development and planning more efficiently than host country leaders.