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THE INFLUENCE OF MULTI-NATIONAL CO-OPORATION IN THE ECONOMIC DEVELOPMENT OF NIGERIA (A CASE STUDY OF GUNINNESS NIGERIA PLC, BENIN CITY)

Dept: COOPERATIVE ECONOMICS File: Word(doc) Chapters: 1-5 Views: 17

Abstract

The main focus of this research work is to examine the influence of multi-national co-operations in the economic development of Nigeria. MNC’s are agent of development in the sense that they constitute the source of capital investment, employment for the people, technological transfer etc. However, many detest their existence because they are agents of exploitation of the people they came to develop. In this regard, the objectives of this work is to ascertain the extent of involvement of multi-national co-operations in the economic development of Nigeria using indices like employment provision, transfer of technology and to determine the political, socio-economic implications of their existence in Nigeria. All these were discussed in the chapter one. In chapter two, related literatures were reviewed. The literature encompasses people’s view on the activities of multi-national corporations. Chapter three consists of research design and methodology. The sources of da

CHAPTER ONE

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

In third world countries most people associated multinational companies with non-colonialism.  While the Euro-American nations described multinationals as the engine of growth in the underdeveloped countries.  These two opposing views about multinationals will help to examine what multinational corporations are all about.

To define multinational company Walshi L.S. made us to understand that a multinational company produces and sell at both home and abroad.  In fact, the essence of multinational is international production.  It involves a corporation in the establishment of subsidiaries.  From the foregoing, it become clear that there are several approaches in defining a multinational co-operation.

 

This approach tries the definition by emphasizing structural criteria such as the number of countries in which a firm is doing business, ownership from many nations, composition of the top management being nationals etc.  Another school of though in this approach defines it through stressing performance characteristics such as absolute control, relative earnings of shares, sales, assets, employees committed to foreign operation etc.

 

       Different schools of though in this approach address the issue by suggesting an evolutionary process of international to multinational, transitional and supranational organization, which can be diagrammed as follows:

 

International

Multinational

Transnational

Supranational

 

 

 

 

International:      An organization is classified as international when the organization engages in foreign business but has made no direct investment.

Multinational:      A multinational organization is one that allocates resources without regard to national frontiers.  However, the organization is naturally based in terms of ownership and top management.

Transnational:     This is a multinational organization managed and owned by persons of different nationalities.

Supranational:    This is a transnational firm that is legally denationalized by becoming incorporated through an international agency.

Some of these multi-national co-operations are General Motors, Guinness Nig. Ltd, Nigerian Breweries, Oil Companies, Nigeria Bottling Company, Beecham, M & B, UAC, and a host of others.  These above mentioned corporations have their headquarters in the United States of America and Europe with huge capital and assets based and technical skills extended to their respective countries where their branches are located.

The local branches are mere subsidiaries and are located mainly in under developed countries of the world.  The impacts of these multi-nationals have contributed to the improvement of the economics of such countries where they have their subsidiaries.  These corporations are believed to be facilitating the transfer of technology to the less developed countries, Nigeria in particular.  Ake (1981) is of the view that “the multinational scarcely have the appropriate technology to transfer” while Offions (1980) admits that they are capable of contributing to development.  He however argues that their malpractices wiped away any contributions that they have made.  This is why we say in “management that the multinationals blessings in disguised.

Guinness Nigeria Plc is a brewery company with many branches nationwide and it’s headquarter office situated in Lagos.  The company have a staff strength of over 15,000 workers and a large number of casual workers.  They manufacture Guinness Stout, Harp Beer, Guinness Malta, and the rest of others.  According to a research made to the company the major aim of Guinness is to impart knowledge to Nigerians, technology transfers and skill development that Nigerians can set up their own brewery industries to manufacture their own brands of beer.  Above all, Guinness have contributed health wise by establishing an eye clinic in Anambra state with (250,000) and handed over to the Anambra State Government.

In addition to these contributions Guinness have helped in no small measure in solving the problem of unemployment by employing workers in their various disciplines.

The economic growth and development of any nations is traceable to so many factors among which investment is major. For an economy to developed, it must not be after profit like in capitalist system, it must focus on the betterment and economic development of the country.

Some of the MNCs that helps in the development of Nigeria economy are as follows: Sony, Toyota, Royal, Dutch, Shell, IBM, CIM, coca cola Mc Donald. Diameter – Benz, Bayer, Pfizer and Nestle to mention a few indeed the activities of these multinational corporation now vital roles in linking national economy and defining the nature of the emerging global economy.  Their supportive and able recourse, tangible and intangible which the deploy across of national boundaries to pursue profit and blaster their competitive position augment domestic servicing and provide foreign exchange required for massive investment in infrastructures.

Thus the activities of Multinational Corporation are supportive to the growth and development of many countries including Nigeria.

Firstly, it is capable of contributing to the growth of real output direct investment in the production of tangible goods in the economy.

Secondly, multinational direct investment generates and expands business, stimulate employment, raise wages and replace declining market sectors.

Thirdly, parent companies of transactional corporation system, do support their overseas affiliates by ensuring that appropriate human and material resource are put in place.

Fourthly, when the crowding in effects of multinational direct investment supersedes, its crowding cut effects on domestic economy, growth is accumulated both in the upstream as well as in the down stream business.  Fifthly, it reduces a country propensity to import and lends to increased competition in the host countries which promote efficient allocation of production resources.

In conclusion, turning to the growth and economic development implications of the multinational investments, some ancient and recent studies prove that MNC’s investment is positively correlated with growth and Economic Development.  Researchers like Akinlo (2004), Aseidu (2003), Obinna (1983) and Ayanwale and Bamire (2001) found that multinational corporation investment have contributed positively to the growth and economic development of Nigerian economy.  Specifically, Brown (1962) and Obinna (1983) carried out empirically studies on the activities of Multinational Corporation in Nigeria.

• STATEMENT OF THE PROBLEM

The clash between multinationals host countries has been most intense in the less developed economies.  Individual critics and public officials have leveled vociferous charges against the policies of international corporation and their alleged negative consequences for the economics well being and development of the host nations.  (Gilpin, 1987).  This view promoted the reaction of Onimode (1982) and to conclude that there is more myth than reality in the developmental activities of the MNCs in Nigeria.  He further stated that a thorough empirical analysis of the impact on the Nigeria economy and consciousness will reveal the following:

This thesis argues that most of the capitals in the form of the profits are not interest in the country but sent to the have countries of MNCs for investment , thereby rendering Nigeria industrially, undeveloped.  The royalties or pittance paid to the government by these MNCs can not because of its meagerness be employed into have industrial projects.  In brief, the MNCs export abroad the capital that would have been sued to develop Nigeria thus; the MNCs distort the economy and the economic development in Nigeria because the capital needed for development in no longer here in the country but abroad.

Technological backwardness; it is in the area of argued that the MNCs are regarded as the worst culprit because it is in this section that the MNCs play their greater trick imaginable.  The MNCs by way of purporting to help industrialization Nigeria create a branch plan economy of small inefficient firms incapable of propelling overall development.   The local subsidiaries exist only as enclaves in the host economy rather than as engines of self reliant growth.  These corporations intentionally and deceitfully introduce inappropriate type of technologies that hinder indigenous technological developments.  These MNCs employ capital intensive productive techniques that cause unemployment.  All these prevent the emergence of domestics technologies.  Before the advent of the MNCs, in Nigeria there were so many assorted types of technologies all over the country, though they were of low scale type.   The MNCs rather than help them grew knocks them off systematically through the introduction of more advanced technologies.  The MNCs both retain the control of the most advanced technology and do not transfer it to Nigeria or the rest of the developing economics at reasonably prices.

The negative impacts of MNCs on Nigeria government most noticeable in the area of the technological transfer.  There are four main reasons for this assertion.

1. Most of the imported technologies can under the industrial property system of restrictive patterns and license. This is a very sensitive barrier for Nigeria.  The implication of this is that Nigeria cannot copy and internalize these technologies even if they have the capacity and willingness to do so because it is illegal for them to do so.  Because of this, Nigeria has to made do with dependent development, which has several deleterious economic consequences.
2. The MNC’s jealously guard the technological know-how of their technological by way of refusing to make use of competent staff. The MNCs instead use mere technicians who are at the last run of productive process and simply assembly together what they knew not how it was produced. By implication Nigerians cannot learn from the technicians the intricacies involved in the production of the material or product.
3. Another point of skillful deceit by the MNCs is the fact that were qualified and competent indigenous staff are to be exposed to the technological know-how of a type of production. Sometimes the type of technology they are exposed to is so sophisticated that they are mesmerized by it.  In some cases, the high capital that may be needed simply embarrasses the nation in that they cannot afford it instead she prefers to forget about it.
4. The MNCs increase the mal-distribution of income in Nigeria and other less developed countries. The case of oil workers earning in a month what some federal civil servants earn in a year does not augur well with the development of the nation.  This step creates a class conscious society, which does not help development as such. Therefore, the type of technology that the MNCs imported into the country is the one that serves the few urban elite because only they have the resource to get at it while the generality of the populace continue to face stark underdevelopment.
5. Structural Distortion: The principle of industrialization in an open economy of the Nigerian government in relation to the MNCs has given the MNCs the freedom to choose their line of operations, the location of their industry ad other productive processes. The MNCs natural base is usually in urban centers of the Nigeria society like Lagos, Kaduna, Enugu and Port Harcourt.  The industries in these cities are mainly those of oil and consumer goods.  This urban concentration of MNCs distorted the structure of the society bye enhancing an uneven “development”.
6. Political Instability: Because these corporations require a stable host government, which of course is sympathetic to capitalism, they try as much as possible to cause directly protect the existing government whenever a reactionary leader or group seems to take over the government.  The MNCs try to maintain the status quo that is, dependent development which encourage the emergence of authoritarian regimes in the host country and go ahead to create alliances between international capitalist and domestic capitalists elite.
7. Cultural Degradation: The adverse effects of the presence and operation of MNCs in Nigeria are also felt in the area of our cherished cultural heritage. Indeed, there re negative effects of foreign direct investment on the cultural and social well-being of Nigeria and other less developing countries. The domineering presence of the MNC’s in Nigeria is characterized as constituting a form of “cultural imperialism or coco-iztion of the society” (Gilpin, 1987), through which Nigeria and indeed the rest of the developing countries loss control over their cultural and social development.
   • OBJECTIVE OF THE STUDY

The specific objectives of the study are:-

1. To investigate the role of multinational corporations in the development of Nigerian economy.
2. To ascertain ways Nigeria could maximize the benefits from the multinational corporations and minimize their negative and anti-development objectives.
3. To find out the effects of inadequate performance of the multi-national corporation towards the development of Nigeria economy.
4. To examine the positive impact of multi-national corporations on the development of Nigerian economy.
   • HYPOTHESES/ RESEARCH QUESTIONS

Hi:  The role of multi-national corporations will help to enhance productivity towards the development of Nigeria economy.

H0:  The role of multi-national corporations will not help to enhance productivity towards the development of Nigeria economy.

Hi:  The benefits and minimal of negative and anti-development objectives will help to develop Nigeria economy.

H2:  The benefits and minimal of negative and anti-development objectives will not help to develop Nigeria economy.

H0:  Knowing the positive impacts of Multi-national Corporation will help in the Nigerians economy.

H3:  Knowing the positive impacts of Multi-national Corporation will not help in the Nigerians economy.

H0:  When the inadequacies are found out they will not help in the development in Nigeria’s economy.

H4:  When the inadequacies are found out they will help in the development in Nigeria’s economy.

• SIGNIFICANCE OF THE STUDY

1. This study will help to make some improvement in the multi-national corporation toward the economic development of Nigeria
2. Multi-national Corporation as an agent of Neo colonialism will expose the economy to export more than one raw materials.
3. This research will also help to control the economy towards development.
4. This research will expose to the policy markers and economic planners both of private and public sector
5. However, the research will also help the government to re-structure their relationship with multi-national corporations.
   • SCOPE OF THE STUDY
6. This study will generalize the role played by the different multi-national cooperation but will focus attention on Guinness Nigeria Plc to enable the research have accurate and careful examination of the study.
7. This study will also go a long way to highlight the parts played by Guinness, plc Benin City in multinational coroperation by studying how they are financed, how they make their profits and how the profits utilized the extent they have transferred their technological skills to the host country.
   • LIMITATIONS OF THE STUDY

(The constraints encountered)

1. The results of this study may not be generalized since it is only one of the corporation that was studied out of the whole lot in Nigeria.

However, a global qualification is not necessarily the best approach to this study since much of the data will always remain hidden.

1. The researcher encountered many problems in obtaining relevant data for this study. The coroperation did not give enough data and relevant information and there is no Nigeria body of laws that compels them to do so.
2. The researcher had to combine full time academic study with the research work and this slowed down the pace of this work.
   • DEFINITION OF TERMS/ACRONYMS

1. Multinational National Enterprises (MNE)

This is a cross border national business organization or aggregate of organization that are aggregate of organization that are characterized mainly by the disposal of their managerial ability among several nations.

1. LDC’s

Less developed countries of the world.

1. Trans-National corporation

This is a multinational organization managed and owned by person of different nationalities.

1. Supernatural

This is a transnational firm that is legally denationalized by firm that is legally denationalized by becoming incorporated through an international agency.

1. Parent coroperation

A company, which owns and control foreign direct investment.

1. Head Office

The central organization of the firm as posed to the foreign subsidiaries.

1. Foreign Subsidiary

This is the corporate form, which represents the foreign direct investment..

1. International Division

This is the part of the head office with a foreign geographical responsibility.

1. International Management

The used of executive from any country operating away from their own.