Outline for essay example: this is an example of how to write proper essay in English language.
ARE MULTINATIONAL ENTERPRISES AN ENGINE OF GROWTH FOR EMERGING MARKETS?
Write an essay and prove your argument
Thesis Statement: Multinational enterprises do not promote growth in emerging markets, rather they exploit resources with impunity.
- Historical overview of multinational enterprises, and how they exploited people and resources of the host countries with colonialism and imperialism.
- Multinational enterprises have the sole purpose to enhance the prestige of the mother country and maximizing profit irrespective of the many negative consequences.
- They consume the host country’s natural resources and pay very little in return.
- They demand subsidized energy from the government and often act as agents of the country of origin.
- All the profits are ultimately transferred back to the mother country– flight of dollar
- Despite maintaining operations in the host countries, the living standards of the majority of the people have not improved.
- Glass ceiling: the locals are unable to attain control or a management position within these organizations.
- The FMCGs sector, through excessive marketing campaigns, is reducing the gap between wants and needs.
- The curse of complementary products: doing more harm than good for society.
- Product consumption of such enterprises is resulting in multiple wealth and health crises.
- Environmental costs are huge, and the focus on the CSR initiative is rather very slow.
- Some people are of the opinion that MNCs promote the economy and are engines of growth.
- They are of the opinion that MNCs create more tax opportunities for the government.
- MNCs’ operations result in infrastructure development in the host countries.
- These corporations create employment opportunities for the locals.
- Also, the consumer gets quality and affordable goods and services.
- However, these benefits can only be attained when the government can maintain strict monitoring and control mechanisms to safeguard the rights of the public.
- Way Forward: A country’s standard of living is determined by its ability to produce goods and services – promote local business.
Trade is one of the oldest inventions of humans. In fact, the art of writing –the basis of all human progress– has its origin in trade. According to popular archaeological views, the oldest clay tablets discovered from Egypt and Mesopotamia have recordings related to trade and taxation (Bellis, 2019). The reason that trade has remained important for humans, for such a long time, is because of its mutually beneficial qualities. Thus, there is always a win-win situation for all the stakeholders. In the present era, the basic concept of business has remained the same, but the gains and losses have become complex due to the involvement of multiple stakeholders. Therefore, it has become difficult to assess who is the real winner in a certain business transaction. With globalization, businesses have become global through the incorporation of multinational corporations (MNCs). In certain cases, it is easier to conclude that these MNCs have attained more power than nation-states themselves. Nevertheless, historical evidence suggests that these corporations have always pursued the agenda of their mother countries while indirectly destroying the interest of the host countries. They indulge in the extraction of cheap natural resources and energy, and with little value-addition, sold the same product to the public of the host country. Not only this but also the exorbitant profits are transferred back to the country of origin instead of reinvesting in the betterment of the local populace. This explains why most of the third world is still struggling on the economic front despite the fact that many MNCs are functioning in their vicinity for quite a long time. Neither the standard of living has raised nor locals have secured managerial positions in the said organizations. Similarly, the consumption of the end products of these organizations has a heavy toll on the environment as well as on the health and wealth of the people. In Pakistan, such products have significantly altered socio-cultural habits leading to numerous long-term problems. One cannot deny the benefits of MNCs such as job creation, competitive products, infrastructure development, and increased government revenues, among others; however, these benefits become negligible when there is a lapse in government regulations. In such case, these MNCs becomes an instrument of exploitation rather than an engine of growth.
Historically, the discovery of the New World in the 14th century was made possible because of the intense competition between the European states through their business entities. In fact, Great Britain’s enormous power in the late 18th century was because of its multinational corporation named “The East India Company”, which had established thirteen colonies for Britain in the new world. The company extracted resources from colonies transformed them into finished products in Britain and sold these items back to those colonies. In order to maintain the monopoly, the company introduced buying restrictions on people in the form of acts. For instance, the Hat Act of 1733 was enacted so that people should buy only Britain-manufactured hats. (The Hat Act 1732, n.d.) This direct confrontation with the public ultimately resulted in the American revolution.
The same company (The East India Company) then shifted its focus to the Indian subcontinent establishing manufacturing units in the 1600s. Taking advantage of the lower level of understanding of the local leadership, the Britishers extracted valuable raw materials with impunity and provided very little compensation in return. Sashi Tharoor, an Indian politician in his book “An era of darkness: The British Empire in India” claims that the Britishers had extracted approximately £18,000,000 worth of items each year between 1765 to 1815 from the Indian subcontinent. In light of this view, the narrative that the Britishers have provided India with quality rail, road, and military-bureaucratic infrastructure is completely wrong. (Merchant, 2017) Thus, they have taken a lot from the subcontinent through their MNC, while providing very little for the betterment of the local population in return.
Coming towards the present era, the role of MNCs has not changed much. Their sole purpose has remained the same: to maximize profit generation and to promote the interest of their mother country. Though they do not indulge in such activities directly anymore; however, whenever the conditions permit, they take full advantage of the situation, indirectly. To begin with, take the example of bottled water. Water is a natural resource and should be available to every citizen irrespective of socio-economic status. In the worst cases, when there is extreme drought, underground water is utilized by the government for public welfare. However, in Pakistan, most companies including NESTLE were utilizing this precious underground water resource and charging premium prices from customers in return. Moreover, the company was not paying a single penny in return for water taxes. Due to massive public anger, the Supreme Court of Pakistan reprimanded all such companies directing them to improve quality and impose water taxation. (Daily Dawn, 2018)
Similarly, MNCs put excessive pressure on the government to cater to their energy needs at the least possible cost. Pakistan, where the government is struggling to provide affordable energy to its public, is unable to balance the tradeoffs between the sustainable energy mix and high business-consumer demand. The MNCs in Pakistan are often quoted saying that they are unable to continue their operations because of a lack of uninterrupted power supply (Editor, 2022). Therefore, in order to cater to their needs on an immediate basis, the government destroyed one of its main state machinery – the WAPDA. In his book “Issues in Pakistan’s Economy”, Akbar S. Zaidi is of the view that State Owned Enterprises (SOEs) are the key component of a nation’s long-term progress as they pursue national as well as public interest along with profit maximization. However, the business-politico nexus in Pakistan, taking advantage of the crises, has replaced energy-SOE with many private companies (IPPs) benefiting the foreign interest. The irony is that the energy crises still remained unaddressed while the long-term national, as well as public interests, got severely hurt.
Furthermore, all the profits of the MNCs are ultimately transferred back to their country of origin. The economies of the majority of the third-world states are linked with the US dollar. When these MNCs transferred their profits back to their country, there is a flight of dollars and the host countries face a balance of payment crisis (Oxfam, 2015). In other words, supporting MNCs means discouraging local businesses. With local businesses, all the profits remain in the same country. Moreover, the long-term interest of the local businesses perfectly aligns with the interest of the public in general. This phenomenon is perfectly reflected by the dependency theory of international relations (Wikipedia, n.d.).
Not only this but also MNCs have played no significant role in the socioeconomic development of the local population. Despite maintaining their operations in Pakistan for a very long time, most MNCs do not pay heed to addressing such long-term public issues. For instance, international food companies like Nestle, PepsiCo, Coca-Cola, and Unilever, among others, have completely failed to address the problem of food insecurity in Pakistan. Most of their products are consumed by the upper or upper-middle-class population. Whereas, their products are most needed in the least developed areas such as parts of Balochistan, South Punjab, and interior Sindh, where access to clean drinking water and food supply are limited. According to some estimates over 60% of Pakistanis are food insecure (Din, 2020). Moreover, most of the local population is unable to secure a gold-collar job or managerial positions in such organizations. The control of the upper management still resides with the foreigners. Thus, we can say that food MNCs are strictly global centralized corporations in Pakistan, and they are strictly following the light-green approach of shades of the green spectrum.
Likewise, the FMCGs in Pakistan are slowly reducing the gap between wants and needs. Need is something that is essential for survival while want is something that is not. Therefore, a rational human being will always focus on fulfilling needs instead of wants. In Pakistan, this distinction is slowly disappearing. For instance, many people have developed the habit of consuming soft drinks regularly. The habit is so infused that it is substituting water consumption with such beverages. The downside is that it is negatively affecting the time, wealth, and health of the people (Vartanian, Brownell, & Schwarts, 2007). The same is the case with cigarette and tea consumption. According to the UN Health agency, non-communicable diseases like diabetes, and obesity, among others, are killing more people than ever before (Noorani, 2020). Similarly, the complimentary products lie in the same category. For instance, people cannot resist the urge to watch movies without salty snacks and fizzy drinks. All these habits are slowly becoming inert thanks to the excessive marketing campaigns by the FMCGs.
Last but not least, the environmental toll of MNCs is enormous, while the CSR initiatives are rather late, slow, and negligible. We can all agree that the reason that businesses relocate (as MNCs) to the third world is to attain monetary advantage in terms of cheap labor, raw material, and lax government regulation and environmental standards. As we all know the history of business is as old as human civilization. However, the human realization of the environmental impact began as late as 1960 with the publication of Rachel Carson’s book “The Silent Spring”. Incidents like the great London smog of 1952 have little impact on businesses. However, the subsequent environmental movements have put massive pressure on businesses to include the triple-bottom-line approach in their business models.
Pakistan’s Green House Gas emissions are negligible in the world (Macrotrends, 2022); however, the country is more vulnerable to adverse climatic conditions. The recent monsoon flooding is the best example in sight. Because of such vulnerable conditions, the MNCs conducting operations in Pakistan have a higher social responsibility. Instead, there are reports that MNCs are the sole entities that are responsible for polluting land, sea, air, and ground & underground water (Masood, 2020). Similarly, Pakistan’s Senate Standing Committee on Climate Change was shocked to learn that Pakistan is the top destination for the first world for exporting garbage (Shehzad, 2022). Thus, we can say that MNCs indirectly is harming more than benefitting society as a whole.
On the other hand, some people are of the opinion that MNCs promote well-being and are necessary for economic growth. These people based their arguments on numerous facts. To start with, they believe that MNCs create numerous revenue opportunities for the government. This means that government can charge more income from MNCs on the basis of a large tax base. Thus, the government will be better able to serve its public in terms of social services, and the public will get more benefits in return. Secondly, MNCs will ensure better infrastructure development by pursuing government regularly. For instance, in order to optimally operate, the businesses would require better road & IT infrastructure to compete with other players in the industry. Thus, better infrastructure will benefit everyone: the government, the businesses, and the public at large.
Third, business operations always require human resources. Therefore, these corporations will hire manpower from the local market. Thus, they create ample employment opportunities for the local public, and everyone gets better off. Lastly, the consumers get numerous benefits. The market competition among different brands will force businesses to provide better and better quality with least prices. Hence, consumers will get affordable good quality products & services and will have the opportunity to choose the best among them.
However, these benefits can only be attained in such countries where the government are true representative of the public and can maintain strict accountability and regulatory standards. In third-world countries, the governments are often weak and are unable to curtail the excesses by the business empires. Moreover, there is business-politico nexus: numerous examples can be quoted in the context of Pakistan where a certain legislature or a civil-military bureaucrat has stakes in the success of a certain business venture. For instance, Shahid Khaqan Abbasi deliberately put PIA in losses to make Air Blue more attractive to customers (NewsDesk, 2018). Similarly, there was the Steel Mill privatization scandal where the members of Musharraf’s government were involved in underhand dealings (Tariq, n.d.). Or, the Reko Diq Saga where the provincial government machinery awarded contracts to international firms on minimum possible obligations (Syed Fazl-e-Haider, 2013). Thus, with weak government control, MNCs exploit indirectly to attain high returns. Therefore, the long-term consequences are disastrous like the one witnessed globally in the shape of climate change.
So, what should third-world countries like Pakistan do vis-à-vis MNCs? Should these corporations be banned altogether for the flow of resources from a “periphery” of poor and underdeveloped states to a “core” of wealthy states enriching the latter at the expense of the former as indicated by the dependency theory? (Wikipedia, n.d.) Or, they shall be allowed to conduct their business as usual at the expense of the socio-environmental costs? In our opinion, countries like Pakistan needs to adopt a short and long-term strategy to address this issue in order to create a win-win for all stakeholder. In the short term, the government needs to enhance the capabilities of local businesses, by incentivizing and making them environmentally compliant, so that they come at par with the MNCs in terms of value creation. Similarly, the cheap extraction of resources by MNCs should be penalized with heavy taxation. In the long term, the government needs to address the policy-related issues associated with meritocracy, transparency, accountability, and public awareness through strict policy implementation.
To wrap up, it can be said that MNCs have a long history of resource exploitation. The benefits that these corporations extracts are exponential while the amount invested in return for social welfare is almost negligible. Moreover, their operations are endangering the existence of the third world in the shape of recurring climatic disasters. Also, despite maintaining their operations for such a long time, the basic social and economic problems of the third world have not shown any significant improvements. Considering all these facts, it can be safe to conclude that multinational corporations do not promote growth in emerging markets in the true sense, but rather are the tools for resource exploitation.
History of Accounting From Ancient Times to Today (thoughtco.com)
Why Shashi Tharoor is wrong about Britain’s colonial debt to India (dailyo.in)
Bottled water firms ordered to pay price of groundwater – Newspaper – DAWN.COM
Multinational companies cheat Africa out of billions of dollars | Oxfam International
Energy crisis – Pakistan Today
dependency theory | Definition & Facts | Britannica
Food Crisis – Pakistan – Beacon Help
Non-communicable diseases killing more people than ever before: UN health agency | | 1UN News
Effects of Soft Drink Consumption on Nutrition and Health: A Systematic Review and Meta-Analysis – PMC (nih.gov)
Pakistan Greenhouse Gas (GHG) Emissions 1990-2022 | MacroTrends
Multinationals exporting pollution to developing world (dailytimes.com.pk)
Pakistan top destination of waste import (tribune.com.pk)
Pakistan: $23.8 billion corruption from privatization under Musharraf | asia-pacific-action.org