ABSTRACT
This research work examines “Multinational Corporations and third world countries; Nigeria as a
case study”. Eighty respondents were randomly selected and served as the sample for the study.
Two research hypotheses were formulated and tested using the simple percentage statistical
formula. Based on the result of findings, it was concluded that multinational corporations plays
a key role in the development of third world countries.
To further enhance the impact of multinational corporations on third world countries,
recommendations were offered for policy implementation by the researcher.
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TABLE OF CONTENTS
CERTIFICATION i
DEDICATION ii
ACKNOWLEDGEMENT iii
ABSTRACT iv
TABLE OF CONTENTS v-viii
CHAPTER ONE 1
1.1 Background of study 1-4
1.2 Statement of problem 5
1.3 Research questions 6
1.4 Objective of study 6
1.5 Hypotheses 7
1.6 Significance of study 7
1.7 Scope of study 7
1.8 Chapterization 7-8
1.9 Definition of terms 9-10
CHAPTER TWO
Literature review and conceptual framework
6
2.0 Introduction 11
2.1 Multinational Corporations (MNCs): Concept and Objective 11-15
2.2 Multinational corporations as agent imperialism 16-19
2.3 Globalization, multinational corporations and Nigeria 19-22
2.4 An overview of the roles played by the Multinational Corporations in Nigeria 22-23
2.4.1 Technology Transfer 23-25
2.4.2 Foreign-exchange savings 25-26
2.4.3 Capital Transfers 26-27
2.4.4 Technological Retardation 27-28
2.4.5 Structural Distortion 29
2.4.6 Employment policy and discriminatory salary payment. 29
2.4.7 Environmental degradation 30
2.4.7 Subversion of public policy 30
2.4.8 Cultural degradation 30-31
2.5 Theoretical framework
2.5.1 Dependency theory 31-36
2.5.2 Modernization Theory 36-40
CHAPTER THREE
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3.0 Introduction 41
3.1 Research methodology. 41
3.2 Research Design 42
3.3 Research Population 42
3.4 sample and sampling technique 42
3.5 Sources of Data Collection 42
3.6 Research Instrument 42-43
3.7 Validity and Reliability of Instrument 43
3.8 Data Collection Technique 43
3.9 Data Analysis Technique 44
CHAPTER FOUR
4.0 Data presentation, analysis and interpretation
4.1 Introduction 45-60
CHAPTER FIVE
5.0 Summary, conclusion and recommendation 61
5.1 Summary of findings 61-62
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5.2 Summary 62
5.3 Conclusions 62-63
5.4 Recommendation 63
REFERENECES 64-66
QUSTIONNAIRE 66-68
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CHAPTER ONE
1.2 BACKGROUND OF STUDY
Multinational corporations have existed since the beginning of overseas trade. They have
remained a part of the business scene throughout history, entering their modern form in the 17th
and 18th centuries with the creation of large, European-based monopolistic concerns such as the
British East India Company during the age of colonization. Multinational concerns were viewed
at that time as agents of civilization and played a pivotal role in the commercial and industrial
development of Asia, South America, and Africa. By the end of the 19th century, advances in
communications had more closely linked world markets, and multinational corporations retained
their favorable image as instruments of improved global relations through commercial ties. The
existence of close international trading relations did not prevent the outbreak of two world wars
in the first half of the twentieth century, but an even more closely bound world economy
emerged in the aftermath of the period of conflict.
Multinational corporations take many different forms, ranging from companies that participate
only in direct importing and exporting, to those making significant investments in foreign
countries, to those buying and selling licenses in foreign markets, to others engaging in contract
manufacturing (permitting a local manufacturer in a foreign country to produce their products),
and still others opening manufacturing facilities or assembly operations in foreign countries.
In more recent times, multinational corporations have grown in power and visibility, but have
come to be viewed more ambivalently by both governments and consumers worldwide. Indeed,
multinationals today are viewed with increased suspicion given their perceived lack of concern
for the economic well-being of particular geographic regions and the public impression that
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multinationals are gaining power in relation to national government agencies, international trade
federations and organizations, and local, national, and international labor organizations.
Despite such concerns, multinational corporations appear poised to expand their power and
influence as barriers to international trade continue to be removed. Furthermore, the actual nature
and methods of multinationals are in large measure misunderstood by the public, and their longterm influence is likely to be less sinister than imagined. Multinational corporations share many
common traits, including the methods they use to penetrate new markets, the manner in which
their overseas subsidiaries are tied to their headquarters operations, and their interaction with
national governmental agencies and national and international labor organizations
Multinational corporations are those mega companies that came into being in Nigeria after the
abolition of slave trade; they became more prominent during the heydays of colonialism and
have even dominated the Nigerian economy after her independence. Rodney 1972 reasoned that
‗after the abolition of slave trade, European countries needed market for surplus products and
place to access cheap raw materials and labour, Africa thus became the obvious destination‘,
consequently, today, multinational corporations like United Africa Company (UAC), Lever
Brothers, Coca-cola company, Mobil oil, Shell BP, to mention but a few adorn the landscape of
the Nigerian economy. Multinational corporations according to the Wikipedia free dictionary are
organizations that are owned or control productions of goods or services in one or more countries
other than the home country.
The emergence of Multinational Corporations in Nigeria dates back to the period of Mercantilist
trade, when European traders and explorers came to trade in West African coast, including
Nigeria‘s Coastal Towns like Calabar, Opobo and Lagos. This trading started with Human
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Merchandise and progressed to primary products like palm produce, cocoa and cotton. These
companies transcend from pre- colonial to colonial and post colonial. The MNCS dominated all
sector of African economy before independence.
Using a theory in the theories of international relations to explain multinational corporations i.e.
the radical perspective, they offered a powerful critique of multinational corporations. Abhorring
the notion that multinational corporations are positive instrument of economic development,
radicals sees them as instrument of exploitation. Multinational corporations particularly those
from the developed world, perpetuate the dominance of the North and explain, in large part, the
dependency of the South. So the interdependence that multinational corporations represent to the
liberals is interpreted by radicals as imperialism and exploitation. In that system, decisions are
taken in the economic and financial centers of the world- Tokyo, Berlin, New York, and Seoul
while the work of carrying out those decisions occurs in factories of the less developed countries.
According to radical theorists, multinational corporations embody the inherent inequality and
unfairness of the international economic system.
However, the activities of Multinational Corporations multinational corporations and their
relevance to the economic development of third world countries (Nigeria inclusive) have always
generated controversies in international economic relations. Being the most frequently studied of
all the non-state actors in the international relations, Multinational corporations mean different
things to different people. Thus, at the two extremes of international divide (developed and
developing world) Multinational corporations merely represent both good and evil. While the
developed countries stress the important roles of the Multinational corporations in the
development process, the developing countries on the other hand express concern about the
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negative effects the operations of the Multinational corporations have on their growth and
development.
Multinational Corporations operations create a variety of problems and opportunities for both the
host and home countries governments.
The tremendous growth and spread of Multinational corporations has sparked controversy. Some
people believe that Multinational corporations contribute to unemployment in the country where
they are based by hiring foreign workers for overseas branches or affiliates. Some people also
believe Multinational Corporations exploit the people and resources of other countries. However,
others argue that Multinational Corporations create more jobs than they eliminate and that
Multinational Corporations bring capital and technology to areas that need it. Examples of
multinational corporations include; coca-cola, which is domiciled in almost every country in the
world, shell oil, focuses more of its attention to oil producing states amongst others. In truth,
these corporations gain a lot, as they prefer to interact with developing or under developed states
where they can enjoy tax reductions, very cheap laws, break labour rules that would have been
enforced upon them if they were in developed states. Gain access to very cheap mineral
resources and gain large revenue as these developing and under developed states specialise in the
production of primary goods and rely upon finished goods from other sources.
However, Third world countries are known to be highly dependent economically; they are
devoted to producing primary products for the developed world and to provide market for their
finished products. They are characterized with rural social structures, high population growth and
wide spread poverty. They are sharply differentiated, for it includes countries on various levels
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of economic development. These countries are also known as the global south, developing
countries and are least developed countries in most aspects. Many third world countries are
located in Africa, Latin America and Asia. They are often colonized by another nation in the
past. The population of third world countries are generally very poor but with high birth rate.
From the given definition and characteristics of third world countries we can conclude and
observe that Nigeria is a third world country.
This research is therefore aimed at examining critically the positive and negative effects of
multinational companies towards the development of third world countries (Nigeria as a case
study) or its underdevelopment.
1.2 STATEMENT OF PROBLEM
Multinational corporations exist everywhere in Nigeria because of the availability of resources
based in the country, they dominate the economy, straddle the indigenous entrepreneur and in the
process create a monopoly and accumulate unimaginable profits. The followings are the
questions arising;
1. How much is their contributions to the economic development of Nigeria given their
enormous resources?
2. Are the contributions of the multinational corporations negative or positive?
3 If the negative contributions outweigh the positive ones, what can be done to balance the
effects?
These are most of the questions that will be answered in the course of the long essay.
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1.3 RESEARCH QUESTIONS
What is responsible for the formation of Multinational Corporations?
What are the contributions of Multinational corporations to Nigeria?
1.4 OBJECTIVE OF STUDY
The objectives of this study will include the following;
To examine the positive and negative impacts of multinational corporation on Nigeria‘s
economy.
To identify the role of multinational corporations in the development of the country‘s
economy.
To proffer solutions to lapses where necessary.
1.5 HYPOTHESES
In order to achieve the statement of problem and objective of study, the following are the
proposed hypotheses;
The activities of Multinational Corporations have contributed positively to the
development or underdevelopment of Nigeria
The activities of Multinational Corporations have contributed negatively to the
development or underdevelopment on Nigeria.
1.6 SIGNIFICANCE OF STUDY
The study is significant for several reasons, they include the followings;
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1. The Nigerian economy has remained underdeveloped quite unlike that of the Asian Tigers
like India, Indonesia, and Malaysia whose economies were worse-off than that of Nigeria a
few years ago. This has happened due to the oil producing status of Nigeria recognized
worldwide and largely controlled by multinational corporations. This will help to espouse
the contributions of these multinationals to Nigeria‘s development and underdevelopment.
2. Various scholars have tried to give various theses on the positive and negative impacts of
multinational corporations on Nigeria‘s economy. This research will try to figure out
between the negative and positive impacts of these corporations.
3. This study will expose to the policy makers and economic planners both at private and
public sectors the negative and positive effects of the various companies activities
4. The final recommendations will add to the growing literature on Nigeria‘s development
and enhance further research
1.7 SCOPE OF STUDY
This study will generalize the role played by the different multinational companies. This study
will also go a long way to highlight the parts played by multinational companies by studying
how they are financed, how they make their profits, how they are being utilized and the extent to
which they have transferred their technological skills to the host country. Finally, how they have
contributed to the growth of Nigeria‘s development positively and negatively
1.8 CHAPTERIZATION
This research work will contain five different chapters.
The first chapter will include;
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Background of study
Statement of problem
Objective of study
Research questions
Hypothesis of the study
Significance of the study
Scope of the study
Limitation of the study
Definition of terms
The second chapter will include;
Literature review
Theoretical review
Conceptual framework
Summary of literature
The third chapter will include;
Research methodology
Sources of data
Method of data analysis
The fourth chapter will include;
Data analysis and interpretation
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The last chapter which is the fifth chapter includes;
Summary
Conclusion
Recommendations
References
1.9 DEFINITION OF TERMS
MULTINATIONAL COPORATIONS
Multinational corporations are those organizations that are owned or control productions of
goods or services in one or more countries other than the home country.
THIRD WORLD COUNTRIES
This refers to the less developed countries of the world. They constitute the majority in the UN.
They are usually characterized by widespread illiteracy, dependency on primary commodity
exports, high density of population with large rural proportions, mono-cultural economies and
low industrialization found in Africa and Asian countries.
IMPERIALISM
The policy of extending the rule or authority of an empire or nation over foreign countries, or
of acquiring and holding colonies and dependencies.
HOST COUNTRY
These are countries whereby Multinational Corporations carry out their activities e.g Nigeria
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HOME COUNTRIES
These are countries of the Multinational Corporations, i.e. the origins of the Multinational
Corporations
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