Abstract Transnational corporations - companies which operate in two or more nations - have emerged onto the global scene as business conglomerates that affect the lives of people on six different continents. This paper analyzes the affects that transnational Corporations have on developing countries, examines how they can stimulate economic activity and the detrimental, darker role TNC's can play in harming the environment and taking advantage of the less stringent standards in developing countries. The paper uses Cypher and Dietz's "The Process of Economic Development", Chapter 14: TNC's (1998), as well as Andre Frank's "The Development of Underdevelopment" (1969).
From the Paper "Cypher and Dietz term DFI or Direct Foreign Investment as the ownership of productive assets by a corporation in another nation. They continue by pointing out that existing plant and equipment is quite often the target of TNC investment for purchase, reducing the ownership and control of domestic capitalists (C & D 1998, PGs. 436-438). When TNC's purchase existing plants and equipment in developing countries, they are not aiding the local economy or stimulating investment, but rather are carving their own niche into the developing country that substitutes local ownership and control. Based upon statistical analysis of total investment in developing countries, DFI accounts for a small slice and thus has a rather modest impact on the growth of lesser-developed countries. Cypher and Dietz point out that the impact the TNC positively has on undeveloped countries is more qualitative in nature than quantitative (C & D 1998, Pg. 438)."
