Transnational corporations (TNC) are large companies that operate in more than one country at a time for example Holden and Nike. Trans. corporations have become some of the most powerful economic entities in the world today. These corporations account for seventy percent of world trade. They have advantages and disadvantages and have a very significant impact on Australia and the Asia Pacific Region.
TNCs offer advantages and disadvantages and are a very controversial issue. A disadvantage is that TNCs including Nike are exploiting cheap labour in third world countries such as Cambodia. These corporations will pay workers a few dollars a day and make excessive profits. Indonesian Nike employees will be paid only two dollars per day whilst Nike spend over twenty five million dollars promoting the Nike brand. The industries that TNCs control move around the world seeking low labour costs and so locate in cheap labour countries.
One effect of the growth of TNCs is that it has greatly increased factory employment opportunities in countries such as Malaysia, Singapore and Indonesia. TNCs create much needed employment for local workers in third world countries including maintenance staff and workers. It has also resulted in the transfer of technology and technological skills. People begin to have the opportunity to use modern equipment and learn techniques of mass production and distribution and advance to service activities. Others see these developments as being exploitative, offering low wages and poor working conditions, while providing only minimal training.
In recent years corporations have gained remarkable power. A disadvantage is that transnational corporations are becoming more productive and many have a total income greater than that of a whole country. For example when comparing the turnover and corporate sale of TNCs and countries, the economy of Toyota is bigger than Norway and Ford is bigger than South Africa.