The Analysis of Multinational Corporations

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The car multinationals are directly providing employment to more than 20 million people and to a lot more in the associated industries. Today these are in a position to decide the fate of the government. Ownership and power are the same as other industries also. Today two corporations control 80 percent of the coffee production of the world. merely four corporations account for 87 percent of the world’s tobacco industry, and two corporations–Boeing and Airbus have almost monopoly over civilian airplane production by having a share of 95 percent. The top 200 firms now control one-fourth of the world’s monetary activity. Among the top 100 of these, the increase in total assets has been extraordinary. Their assets have gone up to USD 4.2 trillion in 1995 from USD 0.5 trillion in1980. For example, the wealth of the food and retail multinational Wal-Mart, after buying Asda in Britain, has become more than 161 countries including Israel, Poland, and Greece. General Motors is bigger than Denmark while Ford is bigger than South Africa [Morgan (2000), pars.3-5]. These multinationals are better organized than the states where they invest their money. It gives them the power to negotiate and manipulate deals particularly in weak and developing nations [Kehl (2009), p.2]. The globalization is not only changing the powers of the state, but it is also changing the territories of the states. Ohmae [1993 as cited in Axtmann (1996), p.119-120] explained that the global economy is causing the emergence of ‘region states’. A few examples of such cross Border States are Hong Kong and Southern China, Vancouver and Seattle and Toronto, Detroit, and Cleveland. These region states are economically integrating entities that primarily link with the global economy rather than their host country. The few hundred multinationals are described as the hub of the globalization by the United Nations. These handful multinationals are controlling most of the world’s industrial capacity, technical knowledge, and financial transactions. How just a single company can dominate a whole economy is evident from the Japanese giant Mitsubishi. With a collective economic activity that makes it larger economically than the fourth most populous country in the world, Indonesia. It is quite obvious that such corporations will have considerable political and economic influence. Today the success of the world’s most powerful governments is closely linked with well being of MNCs. No wonder it is believed that these have acquired the role of the state or have superseded the powers of government and now rule the world [Morgan (2000), pars.6-7]. And that is not all. the MNCs also have a strong influence on supranational bodies. When NATO gathered for its fiftieth anniversary, a dozen companies contributed $250,000 each to put their chief executives as directors on different NATO summit’s committees. Corporate also sponsored the WTO summit in Seattle. Companies such as Ford, GM, Microsoft, Boeing, and Deloitte and Touche all contribute over $250,000 to get five seats each to the WTO opening and closing receptions [Morgan (2000), pars 17-18].

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