Multinational corporation have great postive effects on developing Essay

Multinational corporation have great postive effects on developing countries - Essay Example Their investment in developing nations have improved the material well being of the people in these nations through access to better goods or services and improved wages. Studies conducted by the OECD reveal that developing nations tend to receive higher wages from multinationals than their local counterparts. The OECD report found that a person working for a multinational is likely to earn 40% more wages than their counterparts in local firms. This is especially true for workers in Latin America and Asia. MNCs are motivated by the need to retain more workers in order to reduce turnover costs (OECD 44). Not all such organisations intend to pay workers more for similar work. Instead, they do so because the nature of industries they invest in is capital intensive. Additionally, a number of them have fairly large operations which may require committed employees. It is for this reason that they tend to pay better rewards to workers than their peers in firms within the same industry. Irrespective of their motivations, the end result is better earnings (Dunning and Sairanna 5). Analyses conducted in developing nations concerning how wages change over time after foreign direct investment show that wages may increase by close to 20%. Indonesia enjoyed a 19% increase in wage labour owing to foreign acquisitions of local firms. The increase emanated from the use of modern techniques of production. Parent companies in the first world already had the technical expertise needed to enhance production. Therefore, workers accumulated new skills that were eventually used as a precursor for better pay (Hijzen and Swaim 8). If a person moves from a locally-owned firm to a foreign-owned one in a country like Brazil, they are likely to enjoy a 21% increase in earnings. The OECD Employment outlook report also shows that those who make the same transition in a country like Portugal can enjoy increases of about 14%. It is for this reason that many third world countries seem to be so