Multinational Corporations
Globalization has a considerable effect on the way businesses are being carried out. With the tremendous growth spurred by technology and development of new business models, we see an increasing instance of corporate outsourcing. This shift is observed in the manufacturing sector also as many multinational corporations are relocating their production centers to offshore locations that offer cheap labor and material costs. The result is the loss of thousands of jobs to foreign countries. The NAFTA agreement has furthered this trend towards offshore manufacturing. The manufacturing sector which employed more than 19 million in 1979 now employs only 14 million, indicating a huge fall.[Clyde Weiss].While increased productivity due to technology may be ascribed to part of this decline, there are also significant concerns about the impact of closure of local manufacturing plants and their relocation overseas. Let us have a brief overview of this emerging practice and the implications for the developing as well as the developed countries. There is definitely a drastic shift in the manufacturing sector with an increasing number of profitable companies moving their manufacturing plants to cost effective locations in the developing n
ations. China and India, among other Asian countries, are the major destinations for US and European multinational corporations. While India has received a bulk of it in the service sector, China has attracted huge FDI in the manufacturing sector. Since the early 1990's the FDI in China has been at a steady growth rate, largely helped by the increasing number of US companies shifting their manufacturing plants to the industrial eastern China. As a measure of Chinese competitive force in the market, Mr.Dan Kuhns, president of Selflock Screw Products states, "Wal -Mart buys $12 billion worth of Chinese products a year. If it were a country, it would be China's eighth-largest trade partner" [Walt Shepperd ] It is not surprising, then, that China created an economic landmark when it surpassed the US as the largest attractor of FDI in 2002, which was estimated to be around 30$ billion. A staggering truth is that between October 2000 and May 2001 more than 80 US multinational corporations announced the shifting of their production centers to China. The result was the loss of 35,000 manufacturing jobs in the US. [Ben Vickery] For the developing countries, globalization and the resultant open market and inflow of FDI has resulted in a steady economic upswing. This economic boom also implies a significant lowering of the unemployment rate as the market presents a continuous stream of new job opportunities. On the downside though, the citizens of the developed countries seem to bear the direct impact of the outsourcing trend. Job losses due to shutdown of production units and other outsourcing operations are definitely sensitive issues that need to be addressed immediately. At the same time, it must be borne in mind that the benefits that derive from the relocation of production centers, in terms of reduced price of commodities, and the possibilities
Some common words found in the essay are:
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Approximate Word count = 1251
Approximate Pages = 5 (250 words per page double spaced)
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