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THE EFFECT OF MULTINATIONAL CORPORATION ON THE NIGERIA

ECONOMY

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Based in part on the development of modern communications and
transportation technologies, the rise of multinational corporation
was totally unanticipated by the classical theory of international
trade as first developed by Adam Smith and David Ricardo. According
to this theory which rests on the doctrine of comparative advantage
each nation should specialize in the production and export of those
goods that it can produce with highest relative efficiently while
importing those good that other nations can produce relatively more
efficiently.Nigeria Economy
Underlying this theory is the assumption that white good and
services can move internationally factors of production such as
capital labour and hand are relatively immobile furthermore the
theory deals only with trade in commodities; it ignores the role of
uncertainty economies of scale and technology in international
trade and is static rather than dynamic.Contrary to the postulates of
smith and Ricardo, the very existence of multinational corporation is
based on international mobility of certain factors of production.
Capital raised in London on the Eurodollar market may be used by on
wise based pharmaceutical firm to finance the acquisition of
equipment by a subsidiary in Brazil. Nigeria Economy

It is the globally world innate allocation of resources by a single

centralized management that differenciate the multinational
enterprise from other firms engaged in international business.
Decision regarding market entry strategy, ownership of foreign
operations and production marketing, and financial activities and
made with an eye to what is best for the corporation as a whole. The
true multinational corporation can be characterized by its emphasis
on group performance rather than of its individual components.At
the center of the debate on globalization one the multinational
corporations giant actors who think and act globule. Their existence
is often associated with the phenomenon of globalization itself.
These actors have gained power visibility and influence at all levels,
and one determinant to the setting and implementation of the “
global agenda”. MNCS have created a massive wealth and propelled
high technological development.Nigeria Economy
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