ABSTRACT

The objective of the study is to determine the extent to which multinational firms have spurred up economic growth in Nigeria. Multinational Corporations (MNCs) are those having operations in more than one country. They are subjects to changes in international exchange rates, tariffs, duties, and restrictions on trade. The most successful ones have established production points where labour is cheap, and secures affordable transportation to deliver to their markets. The study used scholarly journals, articles, and textbooks to review the activities of multinational firms in relation to Nigeria’s economic growth, in relation to growth and development, technology transfers and policy issues. From the exploratory literature, the study discovered that multinational corporations have contributed to the economic growth of Nigeria, though varies, the extent of technology internalization and transfers still remains a mirage, while some of the MNCs still engage in unethical business practices that soils their image and the image of Nigeria. Specifically, the gap in technology intensities from MNCs in Nigeria seemed to be widening despite the recent comparative improvement in FDI inflows into the country. Consequently, there is urgent need to upgrade learning and capabilities of the local firms in the country, through the formulation of strategic FDI and technology transfer policies to safeguard the possible negative impact of the declining FDI inflow from MNCs. However, to further attract foreign investors, Nigeria should strengthen and broaden policies to facilitate cost effectiveness by reducing tariffs on imported inputs, as well as, improvement in telecommunications and transportation infrastructures, to further attract inward FDI from developed and newly industrialized countries. Furthermore, since this study highlighted some of the benefits, linkages and relationship between MNCs and economic development; this may give Nigerian policy makers some helpful facts to bring to the negotiating table.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Over the years, Multinational corporations (MNCs) have been a source of controversy ever since the East India Company developed the British taste for tea and a Chinese taste for opium (Stopford, 1998). A typical multinational corporation (MNC) normally functions with a headquarters that is based in one country, while other facilities are based in locations in other countries. In some circles, a multinational corporation is referred to as a multinational enterprise (MNE) or a transnational corporation (TNC) (Tatum, 2010). They enter host countries in different ways and different strategies. Some enter by exporting their products to test the market and to find whether their existing products can gain sizeable market share. For such firms, they rely on export agents. These foreign sales branches or assembly operations are established to save transport costs because there is a limit to what foreign exports can achieve for a firm owing mainly to tariff barriers and quotas and also owing to logistics or cost of transportation. Most of the firms are encouraged by the low wage rates and other environmental factors. To meet the growing demands in the foreign countries, the firm considers other options such as licensing or foreign direct investment which are critical steps. Some continue with export even when they have settled for the foreign direct investment option. Every step takes strategic planning and is motivated by profit through sales growth. The idea of multinational corporations has been around for centuries but in the second half of the twentieth century multinational corporations have become very important enterprises. Tatum (2010) proposes that multinationals operate in different structural models. The first and common model is for the multinational corporation positioning its executive headquarters in one nation, while production facilities are located in one or more other countries. This model often allows the company to take advantage of benefits of incorporating in a given locality, while also being able to produce goods and services in areas where the cost of production is lower (Ozoigbo and Chukuezi, 2011). The second structural model is for a multinational corporation to base the parent company in one nation and operate subsidiaries in other countries around the world. With this model, just about all the functions of the parent are based in the country of origin. The subsidiaries more or less function independently, outside of a few basic ties to the parent. A third approach to the setup of an multinational corporation involves the establishment of a headquarters in one country that oversees a diverse conglomeration that stretches to many different countries and industries (Tatum 2010; Robinson 1979). With this model, the multinational corporation includes affiliates, subsidiaries and possibly even some facilities that report directly to the headquarters. Such direct investment means the extension of the managerial control across national boundaries (Gilpin, 1987). While institutions are important for economic development, particularly in resource rich countries, the interaction between multinational corporations and host country institutions is not well understood (Wiig and Kolstad, 2010). There is a risk that multinational corporations facilitate patronage problems in resource rich countries, exacerbating the resource curse. Multinational corporations (MNCs) in service industries have given this sector’s large and growing impact on the global economy (Goerzen and Makino, 2007). The Marxists view the emergence of the multinational corporations as a historically progressive aspect of capitalism in the process of developing, at international level (Gilpin 1987; Stopford 1988). In all these views both Marxist and non-Marxist, the common basis is productive activity in more than one social formation. Another point to be noted right away is that in a social formation there may be many multinationals with different nationalities and also many corporations of the same nationality. In a social formation where there are many multinational corporations from different nations, there are higher possibilities of conflicts than where they are mainly from the same country. Activities of the multinational corporations in Nigeria have generated a repulsive reaction from many economic theorists like (Onimode 1982). Onimode(1982) went ahead to regard multinational corporations as monsters that have consistently and systematically stultified economic development in various parts of the world. The merits of the multinational corporations in Nigeria, the consequences of economic exploitation of multinational corporations in Nigeria and suggested ways for restitution will be discussed in this study while examining their role towards economic development in Nigeria.