Paper Summary:

This essay shows why developing countries should not fear MNEs. This essay discusses economic factors pertaining to this issue. Following a detailed analysis of the impact of MNEs, the writer demonstrates the case of South Korea, which is one of the 'Four Tigers'. The South Korea case forms an excellent example of the point made here above, namely, that MNEs and their investments need not to be feared but rather be encouraged by developing countries.



1. Introduction
2. Analytical Framework
2.1. The Nature of MNEs and Proposed Investment
2.2. Host Countries' Attributes
3. The Impact of MNEs on Developing Countries
3.1. Resource Transfer Effects
3.1.1. Capital
3.1.2. Technology
3.1.3. Management
3.1.4. Criticisms
3.2. Competition
3.3. Balance of Payments Account
3.4. Employment
4. The Case: South Korea
5. Conclusion
6. Reference List

From the Paper:

"Today's global economy characterized by free trade, free flow of capital and to certain extent free flow of management and technical personnel, is embodied by multinational enterprises (MNEs). Since the end of World War II, MNEs have made substantial investment for operating business in many developing countries. History has shown that MNEs, which undertook foreign direct investments (FDI) in developing countries, strongly contributed to the economic growth of these host countries, hence to the improvement of their living standards. The advantages of FDI generated by MNEs outweighed by far the disadvantages of FDI and the presence of MNEs in these countries, respectively. This is exhibited especially in the case of the four Tiger States in Asia, but also in Latin America and partly in Africa. In the end, the free market system has always proved itself as the major catalyst for economic growth."

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