Dependency Theory Of Multinational Companies

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A multinational company is a company that conducts business in two or more countries but it has a central management in one country. The most dominant MNCs in African countries today include Toyota, shell, Coca-Cola, Lever Brothers, and BP. One positive fact about multinational corporations is that they bring products to the host countries that host countries could not have produced themselves. They also create employment opportunities in the host countries. “This goal may be achieved through acquiring the most efficient locations for production facilities or obtaining taxation concession from host governments”. Some multinational companies are financially stronger than the governments of the host countries, especially the oil companies. For…show more content…
However, they choose to take that profit to their home countries. It is because of this reason that the relationship between the host country and the multinational corporations remains parasitic rather than symbiotic. There is no mutual benefit in terms of equal sharing of profit between the host country and the multinational corporations. They do this with sole purpose of ensuring that the host country remains forever dependent on the multinational corporation and its home government. This is referred to as the dependency theory. The situation in Nigeria, According to Arghiri (1972: p. 26), is such that “underdeveloped countries are exploited through the process of unequal exchange. In the realm of international trade, the underdeveloped countries sell their commodities below value and at the same time buy commodities from the developed countries above the…show more content…
“The proponents of this view argue that MNCs could be used as a foreign policy instruments of their home government” (McPhail, 1988). Onimodo and Aderiran (1983) argued that multinational corporations can be the tools for manipulation that capitalists use to perpetuate poverty and inequality in the African continent. Those who argue in favour of multinational corporations are of the view that the multinational corporations provide resources which the host countries do not have such as capital, technology, managerial and marketing skills and they also create jobs in the country. On the other hand those who are sceptical about the presence of the multinational corporations in the African countries argue that when the companies arrive, they bring their own personnel from their home countries for high skilled positions. They do not teach the local employees from the host country enough skills to use their highly advanced

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