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One of the most important phenomena of the latter half of the 20th century in international business was the emergence of the multinational corporation (MNC).
Another example is the case of United Brands (now Chiquita, producing mainly bananas), which in 1974 paid a $1.5 million bribe to the president of Honduras in return for an export tax reduction.
When the bribe was discovered, the president was removed from office.
Among these the most important are reduction in potential production and employment; transfer of technology to other nations, which might undermine the current and future technological superiority of the home nation; and reduction of potential tax revenue of the home country.
MNCs can positively affect the host country by increasing production and employment (number of employees and skills), and promoting technical progress.
In order to mitigate the harmful effect of MNCs and increase the possible benefits in the host country, several nations have attempted to regulate their conduct.
Some developing nations now allow only joint ventures (i.e., local equity participation and set rules for the transfer of technology and the training of domestic labor); impose limits on the use of imported inputs and the remission of profits; set environmental regulations; and so on.
In addition, the technology transfer usually has very limited linkages with the other sectors of the host country and consequently “the spillover effects” are very limited.
A third criticism is MNC exploitation of domestic resources.
Conglomerated MNCs produce different or even totally unrelated goods in various countries. The phenomenon of MNCs is not new, instead tracing back to the late 18th century when firms like the British, Dutch, and French East Indian companies sought raw materials overseas.
The modern-day counterparts of these raw material-seeking firms are the multinational oil and mining companies, as recent advances in transportation and communications technology increased the feasibility of global production, enabling MNCs to grow rapidly over the past 60 years.