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A Transnational Corporation Influence on the World Economy - Case Study Example

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The paper "A Transnational Corporation Influence on the World Economy" highlights that TNC’s also facilitate the transfer of technology to less-developed countries, and if this happens without impediment, it boosts the host country’s productivity and viability on the international market…
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A Transnational Corporation Influence on the World Economy
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A transnational corporation (TNC) is an enterprise that operates or has branches in more than one country. This business entity may operate in any sphere of the economy, and offer goods or services of any type. The branches of transnational corporations must fall under a common heading, such as ownership or franchise, and through which they operate "under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centres" (UNCTAD, 1990). TNC's are usually so structured that one "corporate" branch exerts influence over the others, and/or resources, responsibilities, knowledge, and protocol are shared among them. Transnational corporations participate in many globalising activities, and in the countries that host them they contribute in many ways to the dynamics of the economy. Three major ways in which TNC's participate in the economic activities of the host country are through international trade, technology transfer and international (foreign direct) investment. These activities, both individually and collectively, have the potential impact host countries in different ways, and these ways depend on several variables. This paper will examine these internationalisation activities and discuss their impact on the economy of the countries involved, especially that of host countries. With the new advancements in transportation, information, communication and technology, international trade has become more prevalent over the past few decades, and especially this past one. Locally, international trade has changed the activities of the market. It has created the need for countries to produce more for export, and encouraged a greater dependence on imports to fill gaps in local markets. In the past, international trade had been dictated by colonialism, but now things have been changing. New super powers have arisen, and they have given birth to transnational corporations. Through these years, multilateral regulations have gradually relaxed many trade barriers, and this movement toward free trade has created the opportunity for these TNC's to rise up and expand into other countries (Australian Human Rights Centre, 2005). The relationship between a country's involvement in international trade and the reduction of its poverty has usually been a positive one, wherever such a relationship can exist. However, the transnational corporations of developed countries have dominated the global economy. The trade agreements formulated among countries have usually rested heavily in favour of the developed countries. Several reasons have been proposed for this, but two stand out. Even in areas where developing countries have a comparative advantage, participation in the global markets has been limited because of market protection that still exists in both developed and other developing countries. The other reason is that the negotiating powers of developing countries are heavily restricted by tight budgets ("Market Access"). Furthermore, it has been noted by the United Nations Conference on Trade and Development (UNCTAD) that many of the larger TNC's have assets that amount to greater wealth than the entire economies of most developing countries. It cites Exxon Mobil as an example, which has (value added) wealth greater than the economies of Pakistan and Chile. Another example is Daimler-Chrysler, whose foreign sales are 40 percent higher than the total exports of Africa as a whole (UNCTAD, 2004, p. 3). It is clear that international trade has indeed been steadily growing, and this trend seems favourable for the future. International trade has "increased by 3 per cent in 2002 and 5 percent in 2003 [and] developing countries made a significant contribution with a robust 9 per cent growth" (UNCTAD, 2005 p. iv). It is certainly the case that the market is ripe for growth for all countries, and developed countries' TNC's are in a prime position to take advantage of the situation. However, they are also in a very good position to help developing countries in their fight against poverty, especially in this time where 1.2 billion of the world's population live on less than $1 per day (p. iv) In this context, the role of transnational corporations (TNCs) is pivotal in ensuring developing countries' full participation in dynamic and new sectors. TNCs should not merely take advantage of the rapidly changing differences in costs, resources and logistics of developing host countries, but must also contribute to building domestic capacity through, among others, transfer of technology and providing adequate human resources development. This will enable developing host countries to build the necessary supporting industries to ensure that it can sustain its participation in dynamic and new sectors. In addition, TNCs should also have greater social and corporate responsibility towards their developing host countries (Sutoyo, 2005, p. 48). This kind of international support will ensure that developing countries acquire access to the international market, foreign investment, knowledge and technology transfer in order to facilitate their participation in globalisation. Technology transfer relates very closely to the movement of corporations across national borders. When a transnational corporation takes its business to a less developed nation, it likely has also to take with it the tools necessary for optimal operation. Most of these tools come in the form of new information, technologies, or skills that have recently been developed but have not yet entered the host country. Technology transfer is often welcomed by the host country, and it is one of the major reasons they seek foreign direct investment from TNC's. In order for economic development to take place, developing countries seek not just the capital and revenue that TNC's can bring, but also the technology that will help the host country sustain its development if and when the TNC leaves. Technology transfer is, therefore, an umbrella term that covers a range of TNC transfer activities. Technology transfer includes the immigration of skilled workers, demonstration of these skills, the implementation of the result of research, acquisition of licenses and patent rights, knowledge gained through formal and on-the-job education, and the decisions regarding investment and trade made by the TNC's (Intergovernmental Panel on Climate Change, 2000). Also, as the name implies, technology transfer does refer to bringing into the host country newly developed machinery and other innovations which often are not already present. There are two modes of technology transfer: internalised and externalised. The internalised form comes with direct investment, where the technology travels through the pipelines of the actual corporation from its parent company to the one in its host country. It is a protective mode in that it keeps innovations in the firm and lessens the likelihood that the competition will have access to the technologies. This is usually the mode employed in the case of highly complex and fast-moving technology areas so that a firm can retain control over its competitive advantage as the developer and owner of the technology in question" (Transfer of Technology, 2001, p. 13) Internalised transfer is beneficial in that the technology is accompanied by financial resources in order to best facilitate its utilisation. The transfer done in this way is likely to be faster, plus the use of the technology by developing nationals will occur in a setting where human resources are available for training and troubleshooting, etc. However, disadvantages of internalised transfer come in the form of payment by the host country for the transfer package, which "may include brand names, finance, skills and management" (2001, p. 15), even where the countries already have some component of the package. The externalised form of technology transfer comes in several forms ranging from the sale of capital goods to franchising. This mode of technology transfer is not limited to the activities of TNC's, however, but their role is of great importance when it comes to areas of very high technology. In these areas they have the capital to acquire the expensive technologies as well as the personnel with the know-how to manage and service them (Transfer of Technology, 2001, p. 13). From the perspective of the developed countries and TNC's, the expansion of the export market in accordance with the profit motive is the major attraction. However, the government may also be interested in Samaritan ventures in the interest of international development or they might offer help to developing countries for political reasons. The pursuit of developmental or environmental goals and the reduction of worldwide poverty are motives of interest to multilateral organisations such as the World Bank, The Global Environment Facility, and the United Nations Development Programme (Intergovernmental Panel on Climate Change, 2000). The motivations for host countries' seeking technology transfer are many. They seek to minimise costs, and this occurs with technology transfers because advances in technology provide immense growth in productivity and efficiency. Such benefits come in the form of increased quality of products and reduced costs, so that profits are eventually maximised. Technology transfers also put developing countries on the map when it comes to marketability, as their resources increase in comparability to that of their international competitors. Exposure to the actions of skilled managers and marketers, plus increased access to international markets are also attractive to developing countries (Intergovernmental Panel on Climate Change, 2000). Other advantages to the host country come in the form of the diffusion of the technology into its other corporations and sectors. Other firms might try to replicate the activities of the TNC's for the sake of competition or merely to better their productivity in a similar or different market. Labour transfer from one company to another might also effect this diffusion. However, deterrents to diffusion might be found in the determination of some TNC's to protect comparative advantage. This might be effected in several ways, such as the introduction of clauses into work contracts that prevent employees from working for another company for a number of years. It might also come in the form of the deliberate prevention of skills transfer from employees who originate in the developed country to those of the host country (Transfer of Technology, 2001, p. 15-16). Though the benefits of technology transfer are many, barriers to transfer exist, and these come in several forms, including the organisational, information, and human capacities to absorb the transfer (UNIDO, 2003, pp. 1-2). The technological infrastructure of the developing country may be too underdeveloped to facilitate the implementation of new technologies. In addition, the education and skill levels of the developing population may inhibit the transfer of information, as the knowledge they have might be too little to build on. The result may be that TNC's might be forced to use their own nationals to do the necessary technology work, or they may forfeit the opportunity to enter the country altogether. The physical and financial expense incurred in the transport of movable and bulky technology is also discouraging to technology transfer. All these factors are closely linked to international investment, as it can be seen that such variables are considered when contemplating expansion into foreign territory. International investment, from the perspective of the host country, is commonly referred to as foreign direct investment (FDI). Most transnational corporations have their headquarters in developed countries. These enterprises may seek to expand their business to other developed or to less developed nations. Their objective might also be to outsource labour in order to more efficiently manage their capital. Whatever the reason for a TNC's investing in another country, this kind of investment is generally deemed favourable for the economy of a developing or other host country. According to Business Roundtable (2003), FDI "plays an integral and increasingly important role in promoting worldwide economic growth and development by stimulating markets, creating jobs, increasing wages, and transferring knowledge and technology." In fact, most countries are of the opinion that foreign investment is indispensable in sustaining long term economic growth, and therefore deem it necessity for developing countries to create conditions that are favourable to the entrance of foreign investors. The ultimate goal of developing countries is to wipe out poverty and improve the quality of life for all its citizens. International investment is in large part a tool that is welcomed in the advancement toward that end. One way that it does this is through the creation of jobs. When a transnational corporation opens a new branch in a developing country, the effect is that of the opening of a new business. It attracts all the resources necessary for entrepreneurship, and this includes labour. As Bimal Jalan (1997) notes, "most of the jobs created by foreign direct investment are in developing countries. As many as 5 million out of 8 million new jobs associated with foreign investment were located in developing countries." When new jobs are created, the country's unemployment rate declines, and this is usually a favourable occurrence, as this too tends to cause an increase in the price of labour. Foreign direct investment therefore leads to a more direct improvement in the wages earned by the citizens employed in the host country. One marked difference between the developed and the developing country is in the wage expectations of the citizens. When a corporation that is based in a developed country employs citizens of a developing country, the cheaper wages paid to them is still substantially more than they would have obtained working for a company based in their own country. In accordance with this is the discovery that "the real wages of labour employed in [TNC's] have also been rising faster than average incomes" (Jalan, 1997). Such companies as John Deere and General Electric offer some of the highest wages and most attractive benefits in Latin and South America. Similarly, Delphi Automotive Systems, a U.S. company in Mexico, started an income continuity plan designed to counteract the sharp decline in wages usually experienced by Mexican retirees ("Corporate Social Responsibility in Latin America," 2001). Foreign direct investment stimulates more efficient productivity in local firms by increasing the competitiveness of the market as a whole. Firms have an incentive to be more efficient whenever competition exists. Price competition leads to lower prices for consumers, and dictates that firms curb any tendency toward waste. Competition in the area of service, too, improves the attitudes of workers toward customers, and leads to cleaner and more attractive working environments. Such improvements have been identified in Uruguay, Mexico and Morocco, where increased productivity has been shown in the economic sectors that house transnational corporations (Business Roundtable, 2003). International investment contributes to the national income of the country also via an increase in government income. The government of the host country is able to collect taxes in three ways. As a part of the international investment agreement, the corporation agrees to pay taxes to the government of its host country in return for permission to conduct business there. Taxes are also deducted from the salaries of those nationals who work for the corporation, and the higher wages they earn mean more revenue per capita for the government from each of those persons employed by a TNC. In addition, the government collects revenue from taxes on products upon their purchase by the consumer. Despite the purported good that can come from foreign direct investments, there is some evidence that FDI may not be as great an economic saviour as has long been thought. First of all, though many transnational corporations invest in developing countries, developed countries do receive the most of the international investment, amounting to 65% in 2000 (Goodspeed, 2005). A concrete example of this is the fact that "in a record year for inward investment - it leapt 31 per cent in 2004 - the UK got $78 billion (43bn) from foreign firms, making it the second-biggest recipient after the US, with $107bn" (The Scotsman, 2005). In order for developing countries to attract foreign investment, they often have to offer lower tax rates, which decreases the amount of revenue that governments receive from these ventures. Futhermore, economic growth, though expected, is not guaranteed by foreign investment, and there are certain factors that should most likely exist in an economy if the presence of a foreign corporation is to amount to much more than exploitation. The economies of these countries must have reached a certain level of development before they can benefit adequately from foreign investment. As is noted by Nunnenkamp and Spatz (2004), the ability of the host country to productively "absorb" the investment is influenced by several factors. These include the national income per capita, amount of human capital, barriers to trade, and "institutional development, which captures factors such as the rule of law, the degree of corruption, the quality of public management, the protection against property rights infringements and discretionary government interference" (2004, p. 55). It is also necessary that the balance of payments be in favor of the increased capital and decreased payments made by the host company in the forms of payments for technical service or equipment purchases. This tells that such incentives for foreign investment as cheaper labour are often overshadowed by liabilities that present themselves in the nature of the host-country's economy, that many investors can be easily deterred from international investment in certain countries. Jalan (1997) writes that one "advantage India has over other developing countries is that of a relatively mature domestic industrial sector. As such, most of the new direct investment proposals are in the form of joint ventures with Indian partners, managed and staffed by Indian nationals or persons of Indian origin. This should ensure greater stability of investments in the future." The idea that international investment has a positive impact mainly (if not solely) on those countries of higher national incomes is demonstrated by this economy. Another foreign investment factor to consider is the technology gap. The more relatively advanced the technology of the foreign investor (that is, the wider the "technology gap"), the smaller the benefits for the host country. Employees that have some idea about the technology involved in a certain industry will more easily grasp the new concepts of more modern machinery. Singapore, for example, has managed to increase its development and economic status significantly because of this. It has angled its technological and infrastructural development in such a way as to facilitate the entrance of foreign investors. It therefore proved easier for investors to invest in Singapore rather than other developing countries with which they would have had to begin "from scratch" where technology was concerned ("Africa's Technology Gap," 2003, p. 27). Foreign direct investment has also had a significantly positive impact on the economy of mainly those countries whose labour force is "sufficiently qualified" or which have well-developed financial markets. It is understood that a close relationship must exist "between education and industry" in order to generate substantial economic growth ("Africa's technology gap, p. 51). The strategic management departments of transnational corporations carry out extensive market and feasibility analyses that take these things into consideration before advising expansion into foreign territories. Schooling, according to Nunnenkamp and Spatz, has been shown to be more important that the general level of economic development as measured by per capita gross domestic product (2004, p. 67). Transnational corporations do a lot to boost the economies of the countries that host them. They engage in international trade, increasing revenue and supplying products to countries that may not have been capable of producing them on their own. TNC's also facilitate the transfer of technology to less-developed countries, and if this happens without impediment, it boosts the host country's productivity and viability on the international market. Foreign direct investment is another positive effect of globalisation, as it also pumps much needed capital into the economies of host (especially developing) countries. If the conditions are right in the host country, TNC involvement helps place them on the right footing to participate in the current trend toward internationalization. One corporation that has recently become involved in many of these activities is Krispy Kreme Doughnuts (KKD). It has become a transnational corporation, having locations now in Ontario, Canada; Sydney, Australia; the United Kingdom; Mexico; Korea; and British Columbia, Quebec (David, 2005, p. 41; Triangle Business Journal, 2004). Its decision to open stores in other countries apart from the United States stems, naturally, from the desire to maximise profits. Results of a strategic analysis of the international market revealed that developed countries with a higher per capita GDP are more likely to provide customers that are willing and able to purchase its products. It can be seen that the areas in which Krispy Kreme expansion has taken place are mainly developed countries. This is reflective of one of the conclusions above which stated that countries with higher national incomes are more likely to attract foreign direct investment from TNC's. Though Mexico is not a wealthy nation, ground transportation facilitates entrance into the territory because of its proximity to the United States. The prospects there appeared favourable as well, since "the company [KKD] plans to open 20 stores in Mexico during the next six years" (Triangle Business Journal, 2004) There has been much transfer of technology involved in the expansion of KKD into other nations. According to Fred R. David (2005), "franchise stores and company stores are required to purchase all supplies from KKM&D" (p. 36). (KKM&D refers to Krispy Kreme Manufacturing and Distribution). This signifies that technology that is specific to the manufacture of Krispy Kreme doughnuts has to be installed in the country to which the corporation takes its business. This is especially important since KKD has recently selected the "Intermec 700 series mobile computers to automate route operations" (Globeinvestor, 2004). These computers have been scheduled by now to exist in all KKD locations in North America and around the world, as "the company expects to have more than 500 Intermec mobile computers in operation when deployment to all company-owned stores [] is completed in 2004" (Globeinvestor, 2004). This has accorded much investment to its foreign locations. Of especial interest is Mexico, as this developing country has also benefited from the high level of technology that this amounts to. In addition, its six locations in Korea have also spread that technology out across a wide base in a region that is also developing (Krispy Kreme Doughnuts, 2004). However, this technology comes at somewhat of a cost since the machinery has to be purchased from the parent company. According to John Authers' article "New financial vehicles ride to the rescue," Mexico's economy responds to the ups and downs of the U.S. economy. With the advent of the Atkins diet, Krispy Kreme had in 2004 reported falling stock prices and plans to stop the opening of new stores, including the ones in Mexico (Norris, 2004). However, in mid-2004, in Mexico, the Krispy Kreme earnings were on the rise (Authers, 2004), as the low-carbohydrate diet was not as much a craze in Mexico. This indicates that the Krispy Kreme investment proved to be positive for Mexico in the earning of revenue and creation of jobs (as well as the previously mentioned technology transfer). What this also indicates is that the Mexico branch of KKD repaid the company for the investment in doing what its U.S. branches had failed to do for months, and that is increase its sales. This demonstrates that TNC's from developed countries, having a profit motive, seek to expand business in developing countries for the sake of earning greater revenue. This does in fact take place, and in the process the TNC offers advantages to host countries. References Australian Human Rights Centre. 2005. "International Trade, Transnational Corporations, and Human Rights Project." Sydney: U. of New South Wales. http://www.ahrcentre.org/content/activities&projects_AHRP.htm Authers, John. 2004. "New financial vehicles ride to the rescue." http://courses.wcupa.edu/rbove/eco343/040Compecon/Mexico/040328growth.txt Business Roundtable 2001. "Corporate Social Responsibility in Latin America: Practices by U.S. Companies."Author. Accessed 10 January 2006. http://www.businessroundtable.org/ pdf/585.pdf ---. 2003. "How the WTO can promote the benefits of international investment." International Trade and Investment. Accessed 10 January 2006. http://www.brtable.org/TaskForces/TaskForce/document.aspxqs=6C25BF159F2 49514 81138A74FA1851159169FEB56936B3 David, Fred R. 2005. Strategic Management: concepts and cases. Upper Saddle River: Pearson Prentice Hall. Fortin, Carlos. 2005 "Foreword" Collection of statements submitted at UNCTAD XI interactive thematic session." New York and Geneva: United Nations. http://www.unctad.org/en/docs/ditctncd20055_en.pdf Globeinvestor. 2004. "Krispy Kreme Doughnuts selects Intermec 700 series mobile computers to automate route operations." Author. http://www.globeinvestor.com/servlet/WireFeedRedirectcf=GlobeInvestor/confi g&vg=BigAdVariableGenerator&date=20040301&archive=bwire&slug=200403 01005208 Goodspeed, Timothy J. 2005. "Taxation and FDI in developed and developing countries." Hunter College and CUNY Graduate Center. Accessed on 11 January 2006. http://216.109.125.130/search/cachep=tax+revenue+Mexico+host+ countries+foreign+in vestment&ei=UTF-8&fl=0&u=isp-sps.gsu.edu/academics/ conferences/conf2004/Goodspeed.pdf Intergovernmental Panel on Climate Control. 2000. Methodological and technological issues in technology transfer. Author. http://www.pnl.gov/aisu/pubs/eemw/papers /ipccreports/specialreports/tectran/008.htm Jalan, Bimal.1997. "Multinationals: demons or angels" The Rediff Business Special. 11 January 2006. Accessed 10 January 2006. http://www.rediff.com/business/nov/11jalan2.htm Krispy Kreme Doughnuts. 2004. "Store Locator." http://www.krispykreme.co.kr/asp/store/store_korea.asp Norris, Floyd. 2004. Krispy Kreme runs head-on into a low-carb wall. The New York Times: Business. http://www.nytimes.com/2004/05/08/business/08doughnut. htmlei=5007&en=87cd7ae8114eab6e&ex=1399348800&adxnnl=1&partner=US ERLAND&adxnnlx=1128262489-sRVjcgu+n7XShGBmnJvF4Q Nunnenkamp, Peter and Julius Spatz. 2004. "FDI and economic growth in developing economies: how relevant are host_economy and industry characteristics" Transnational Corporations. vol. 13.3. 10 Jan. 2006 http://www.unctad.org/en/docs/iteiit20049_en.pdf Scotsman, The. "Foreign direct investment." Author. Accessed 11 January 2006. http://business.scotsman.com/index.cfmid=717042005 Sutoyo, S. 2005 "Indonesia" Collection of statements submitted at UNCTAD XI interactive thematic session." New York and Geneva: United Nations. http://www.unctad.org/en/docs/ditctncd20055_en.pdf Triangle Business Journal. 2004. "Krispy Kreme debuts in Mexico." Author. http://triangle.bizjournals.com/triangle/stories/2004/01/19/daily10.htmljst=b_ln_ hl UNCTAD. 1990. The draft United Nations code of conduct on transnational corporations and the OECD guidelines for multinational enterprises: similarities and differences. New York and Geneva, United Nations. 10 January 2006 Globalisation: International Agreements. http://www.attac.org/fra/libe/doc/unctad.htm ---. 2001. Transfer of Technology. New York and Geneva: United Nations. http://www.unctad.org/en/docs/psiteiitd28.en.pdf#search='transnational%20corpo rations %20technology%20transfer' ---. 2003. "Africa's technology gap." New York and Geneva, United Nations. 10 January 2006 Globalisation: International Agreements. http://stdev.unctad.org/docs/gap.pdf ---. 2004. New Geography of International Trade: South-South corporation in an increasingly interdependent world. So Paulo: United Nations. Accessed on 11 January 2006. http://www.unctad.org/en/docs/td404_en.pdf UNIDO. 2003. Identification, analysis and prioritization of barriers for technology transfer in Turkmenistan. http://www.unido.org/KNITT/files/meet/Turkmenistan_paper.pdf TNCs engage in a number of activities in host countries. Discuss these forms of internationalisation and evaluate their economic significance and impact. Introduction A transnational corporation (TNC) is an enterprise that operates or has branches in more than one country. This business entity may operate in any sphere of the economy, and offer goods or services of any type. The branches of transnational corporations must fall under a common heading, such as ownership or franchise, and through which they operate "under a system of decision-making, permitting coherent policies and a common strategy through one or more decision-making centres" (UNCTAD, 1990). TNC's are usually so structured that one "corporate" branch exerts influence over the others, and/or resources, responsibilities, knowledge, and protocol are shared among them. Transnational corporations participate in many globalising activities, and in the countries that host them they contribute in many ways to the dynamics of the economy. Three major ways in which TNC's participate in the economic activities of the host country are through international trade, technology transfer and international (foreign direct) investment. These activities, both individually and collectively, have the potential impact host countries in different ways, and these ways depend on several variables. This paper will examine these internationalisation activities and discuss their impact on the economy of the countries involved, especially that of host countries. Main Body International Trade Imports and exports There have been an increase in imports and exports around the world because of the formation of TNC's trade barriers Trade barriers have been relaxed as a result of the rise of transnational corporations poverty Transnational corporations provide a powerful tool for developing countries to fight poverty and involve themselves in international trade. TNC's in international trade market Transnational corporations have played the dominant role in international trade since its rise in the past few years. Technology Transfer Technology transfer relates very closely to the movement of corporations across national borders. When a transnational corporation takes its business to a less developed nation, it likely has also to take with it the tools necessary for optimal operation. This is known as technology transfer. Definition of technology transfer Types of technology transfer Examples of technology transfer Internal and external motivations for technology transfer Benefits of technology transfer Barriers to technology transfer International Investment International investment, from the perspective of the host country, is commonly referred to as foreign direct investment (FDI). Most transnational corporations have their headquarters in developed countries. These enterprises may seek to expand their business to other developed or to less developed nations. Their objective might also be to outsource labour in order to more efficiently manage their capital. Whatever the reason for a TNC's investing in another country, this kind of investment is generally deemed favourable for the economy of a developing or other host country. Motivations for foreign direct investment by donor country Motivations for foreign direct investment by host country Benefits of foreign investment Wage increase Market competition Increased national income Myths about foreign direct investment developed countries receive the most of the international investment some developed countries cannot "absorb" benefits of FDI technology gap frustrates some countries' ability to benefit Case Study Krispy Kreme in Canada, United Kingdom, Korea, and Mexico. The case study was a prime demonstration of the international trade, technology transfer and foreign investment in which transnational corporations take part. Krispy Kreme has contributed much in technology (computers and factory equipment) to its foreign businesses. It has both benefited and been a benefactor to its host countries. Conclusion Transnational corporations do a lot to boost the economies of the countries that host them. They engage in international trade, increasing revenue and supplying products to countries that may not have been capable of producing them on their own. TNC's also facilitate the transfer of technology to less-developed countries, and if this happens without impediment, it boosts the host country's productivity and viability on the international market. Foreign direct investment is another positive effect of globalisation, as it also pumps much needed capital into the economies of host (especially developing) countries. If the conditions are right in the host country, TNC involvement helps place them on the right footing to participate in the current trend toward internationalization. Read More
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