Social and environmental impacts of multinational companies

Social and environmental impacts of multinational companies

Social consequences of Multinationals

Today, these companies of extreme sizes are veritable showcases of countries from which they originate. That's why it is so important that they adhere to a code of ethics and practices (environmental, occupational ...) transparent, so as not to damage the image of their country of origin.

These multinationals may have negative consequences for their country of origin. Indeed, foreign direct investment (FDI) can substitute for national investments, and this is one of the major criticisms leveled against managerial strategies of multinationals. Job creation take place abroad and no longer in the country of origin of the companies. In some cases (relocation) domestic jobs are destroyed and then transferred to another country. Then multinationals are criticized because they encourage the increase of the unemployment rate by choosing to operate abroad.

However, in the countries hosting them, multinationals are often more than just economic actors, particularly in developing countries (DCs). DCs represent indeed a labor cheaper, less expensive materials, so FMN grow there ... But, they can also invest in an area with the potential that it represents (eg China ).

In the case of implantation in the developing countries, multinationals are not altruistic : the development is not their primary objective. They have more a logical financial than productive. They prefer to build a portfolio of stocks as profitable as possible, as acquiring and developing a production unit. However, the lure of multinationals for a certain area is fortunately not without benefits for the latter. It is therefore possible to perceive their presence as a development support, direct investment are additional to the national investment. We are witnessing to a creation employment more skilled than the national average, or even to a support of household consumption (wages are higher than the national average). Indeed, the establishment of multinational firms is an essential element for growth and job creation. This implementation enables companies to remain competitive and contribute to maintaining jobs in the host country. Job creation is a major reason so why countries wish to attract foreign investments on their territory, in order to reduce unemployment in their country.

Using the case of Tunisia, it can be seen over a period of 22 years between (1973-1995) as 880 industrial enterprises, completely foreign and mixed, have made investments in Tunisia around 430 million dinars and created 83,600 jobs . This is most manifest for companies totally foreign with a rate of 60% of total employment, that represents 49,800 jobs greater than the number of employments performed by other mixed company which was only 33,800 jobs.

In addition, we can not neglect the role of business in shaping labor. This training is an effective tool to enhance the qualification of personnel, it can be in the form of on the job training (training of manpower recruited) or in the form of training abroad. With her efferent types, training helps to improve the quality of the workforce and to increase the level of knowledge of workers. This allows them to be more competent and productive and therefore an improvement in their production will take place in terms of quantity and especially in terms of quality.

However, MNCs may force employees of the host country to accept lower wages

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