ECON 7950 Research Methods in Economics: The Role of Multinational Corporations in Economics Growth of U.S

ECON 7950 Research Methods in Economics

Research Proposal Topic: The Role of Multinational Corporations in Economics Growth of U.S

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Introduction

In the present era that is filled with better technological advancements, shifting demographics, universal interconnectedness and increased rivalry among the businesses globalization has been the primary and main source that can help organizations grow and achieve competitiveness. Globalization entails the incorporation of the global economy in the transfer of services and goods, labour, innovation and capital. One of the most important aspects of globalization has been the presence of strong multinational corporations that have threatened and control both governments and the states. The overall aim of this study is to describe the part of multinational businesses in the United States and assess the importance of the MNC in the national development. The study will rely on a systematic review and survey research that will be used to obtain data that will answer all the research questions accordingly. The study will go beyond the normal activities of the MNCS to assessment of ways in which it contributes to the economic and social growth of the US. The research will reveal the importance of multinational corporations thus acting as a catalyst to encourage the development of multinational corporations in both developing and developed nations.

Background

Over the years, the global economy has been largely globalizing where so many nations all over the world have been able to open up their national markets to the multinational companies. Ideally, the multinational corporations are considered as companies that have been able to operate globally with both foreign and domestic production, international marketing and trading, management and financing with affiliate representatives. An organization is considered multinational when it is able to enter into the foreign market and play a great role in the foreign markets. The multinational corporations are becoming remarkably recognized, highly sophisticate and have advanced strategically with ability to utilize and gather so many competencies, high skills and specialized minds in the multinational staff and strongly connected them to become a world of decision makers.

The United States has had a number of institutional and economic attributes that foster and attract the multinational activities. These include a large economy, a highly skilled and educated workforce, friendly regulatory and legal climate, political stability, telecommunications and good physical infrastructure. The business leaders and the government of the United States are aiming to nurture and maintain the bases of economic growth since there is demand for economic recovery after the recession. With regards to this, both small and large companies have played a great role in the economic recovery of the U.S. Both categories of firms have been viewed important in the enactment of the economy due to the increased employment opportunities, improved standards of living and better productivity. US multinationals are part of the company that have played essential roles in the recovery of the economy and better economic performance. The US multinationals companies have been greatest contributors of the real domestic product development to the private sectors (Keller and Yeaple, 2009). Thus, these firms have played a vital role in the recovery and growth of the economy. US multinationals have pursued new market opportunities and continually improved their operations in order to remain competitive. They extend to where markets are growing and where talents live as well as where they believe they can gain superior returns. Ideally, this means being able to go after the emerging markets. Most of the current academic studies suggest that the multinationals in the United States have increased investments, job creation, contributed to the growth of the GDP and productivity.

 

 

Literature review

There is no common accepted definition of multinational corporations. Mattes (2009) defines multinational corporations as business companies that have value added upholding in foreign countries. According to Heidenreich (2012) the multinational corporations are considered as economic companies that have their headquarters at their origin country and distribute or produce services and products in the foreign countries or the host country where they have established a branch or an affiliate. He adds that they finance some overseas operations through transferring funds from the parent nation to the affiliate or branch in the host state through Foreign direct investments due to their involvement in direct production activities in the foreign countries with the purpose of controlling the assets available. To Sood (2009), multinational corporations are business enterprises that have held direct investments in foreign countries and that have had value added holdings in many nations.

Dunning and Lundan (2008), supports the idea that Multinational corporations involve in foreign direct investments and in some manner have control on the value added holdings in many nations. Hernnet (2008) has offered different view of Multinational corporations where he states that they are private owned companies that have devised to govern operations through interdependencies of competencies and employment contracts in more than one country. Generally, multinational corporations are business enterprises that have headquarters in their parent country and carries a number of operations overseas thus having value added holdings in more than one state and maintains Foreign direct investment.

Several empirical researches and theoretical studies in the economic field have discovered the important part of foreign direct investment. This has remained evident through sample countries, variables and statistical tools that have been used in the researches offering essential part of foreign direct venture. The main aim of this research is to study the role of multinational corporations that facilitate foreign direct investment in the United States and how it has influenced the economic growth.  It is evident that the foreign direct investment has held a great role in the economic development of other nations with reference to the various research findings through facilitating new systems that are not present in the local market. Developed and developing countries have benefited from globalization which has contributed to activities of multinational corporations that have brought foreign direct investments.

Wolfmayr, et al., (2013) stated that multinational corporations have been the main basis of foreign direct investments. These business operations have brought about innovation in various sectors in the universal host states such as automotive sector, electrical equipment, information technology, biotechnology and other major sectors. Mattes (2010) stated that the multinational corporations establish their operations in the host nations where they are able to share their development and research activities as well as technologies with the national enterprises and partners.

Various empirical researches have provided varying views on the importance of multinational corporations on the economic development. Moran (2012) contended that the relevance of the foreign direct investment in most countries is increasing opportunities such as employment and increasingly eliminating poverty. OECD (2011) has emphasized on the increased capacity of multinational corporations in activities such as technological development, growth and development of the financial sector within the country and the human capital efficiency. Basu and Guariglia (2007) has a negative perception of the multinational companies since they argued that the multinational companies have led to negative economic development within the host state. They contend that they have led to negative interruption in the distribution of properties in the local market and trade. Azman, Baharumshah and Law (2010) finds a negative perception on multinational companies since there are expenses that are linked with the influx of FDI. They argued that the country might rely heavily on the multinational companies thus increased reform of the economy, market segment and increased employment issues. Almfraji and Almsafir (2014) stated that the financial growth of a state is influenced by the technological and innovation change. Knivila (2007) argues that these are key principles of economic growth. Ideally, The FDI by multinational corporations influence economic growth through technological and innovation changes.

Fortanier (2007) argues that the foreign countries/ host countries are affected by the indirect or direct transfer of technologies and transfer of skills. Dunning (2013) argue that the activities of research and development by the multinational corporations have served in technology and transfer of skills in the host country. The role of Global corporations on economic development in the host as well as parent country also include increased employment opportunities. For instance, Hill (2008) states that investment of Toyota in France led to creation of 2,000 direct jobs and other 2,000 jobs in support businesses. Hill (2008) shows that the Foreign direct investment contributes to the nation’s balance of payments. There is main possible balance of payments results include establishing an external subsidiary where the host state receives the original capital flow. The FDI substitutes the import of facilities as well as properties and helps in progress the current state of the nation’s balance of payments.

Hoang et al., (2010) examined the FDI impact by multinational corporations in Vietnam through evaluating 61 provinces in the period of 1995-2006 where he found out that that there is an affirmative and strong influence of FDI on the economic progress of the country where the additional capital obtained from the FDI promotes the development of economy in Vietnam. Koojaroenprasit (2012) evaluated the Influence of FDI in South Korea between 1980 and 2009 where the findings indicated an affirmative and strong FDI influence on the economic improvement of South Korea. This indicates that the FDI or investment by Multinational corporations have remained to have strong and positive influence on the economic development of the host state.

Slaughter (2009) stated that strong US multinationals have been in a position to facilitate the end of economic recession in America. Slaughter (2009) added that the strength and capability of the American economy has been driven by the competitiveness and productivity of the multinational companies that are operating in America. Efficient and innovative companies in America profitably produce services and goods that have led to rise in the standards of living and growth. Slaughter (2009) argued that the US multinational companies have enhanced the American economy through capital investment, development and research as well as supporting good paying American jobs.

Research question and objectives

Strong multinational corporations are believed to effectively compete in foreign markets and are better positioned to lead worldwide operations. The ability of multinational companies in the host countries to eliminated unemployment and hire more workers in the host countries depends with their competitiveness and healthy worldwide operations. The strength of an economy is driven by the competitiveness and productivity of companies that are operating in the host country. Many authors have believed that multinational corporations deliver economic and social development in the host country with a rise in the standards of livings of the people through the foreign direct investments. Concerning the arguments on whether the forweign direct investment inflow from multinational companies brings benefits or costs to the host state, the research will mainly pay attention to examining the part of multinational corporations in the progress and economic development of the United States. To realize the main aim of the research, the intentions below will be stated as the guiding objective for the research. These include;

-To investigate whether the multinational corporations only support domestic economic growth in developed countries like US.

-To evaluate the overall positive effect of multinational corporations on economic development of US.

-To put several case studies in order to show the evidence of positive role of MNCs on US economic development.

-To explore how MNCs have contributed to the economic recovery and development in the United States.

Furthermore, the study has been guided by the following research questions:

1.Do multinational corporations make larger contributions in developed countries?

2.How do MNC contribute to economic growth and development?

3.What are the advantages of MNCs in a nation’s economy?

4.What is the role of international companies in shaping the growth and development of a country?

Methodology

The study will rely on exploratory research design which is a research design used to examine a problem that has not been clearly defined (Williams, 2007). The role of multinational companies in US has not been examined deeply since the US is a developed country. Most of the studies have paid attention to the role of multinational companies in the developing states. This study will be conducted to have a better understanding of the impact of multinational corporations in the United States. For this case the research will begin from genera idea and change into the new direct of the new insights obtained during the research. The exploratory research will rely on survey based method and a systematic review. These two techniques will be used interchangeably to obtained relevant data related to the study topic.

Systematic Review

Systematic review relies on systematic techniques to collect secondary data and synthesize the research findings quantitatively or qualitatively (Williams, 2007). The systematic reviews are formulated to offer an exhaustive summary of present evidence related to a certain research topic. The key objective of the systematic review is to analyse the research problem through critically recognizing, evaluating and adding the results of the relevant individual studies. During the systematic review, the studies that will be suitable for inclusion will have to meet certain criteria. For every research area, the researcher will have to consider whether it is essential to include more studies or exclude more generalizable conclusions in order to improve the quality of the conclusions provided. For instance, the first research question will rely heavily on the systematic review that will be done in order to examine the cost effectiveness and efficiency of multinational corporations from different states such as China, Canada as well as India that have been established in the United states and how they have improved the standards of living of individual in the country through employment and increased productivity.

Through using the systematic literature review, it means that the research will heavily utilize on secondary data which is data that is already gathered from reports, documents, research papers and any literature that has been gathered related to the topics. Considerably, the research will be analytical thus use of secondary data sources will be more efficient. The secondary information will be obtained from different sources that include newspapers, relevant books and documents, journals, government reports and articles that will make the research more informative and relevant. The advantage of using secondary data is that there is no need to carry out the research since data is already available from the sources and thus information gathered will complete the research gaps as well as offer extra information that will be composed to facilitate an accepting of the research issue. With the increased logical explanation, data and explanation on multinational corporations as well as their role on economic growth from the studies, it will be essential to analyse how they have facilitated economic progress in the United States.

Survey Research

The survey research is a technique of data collection where the researcher will administer a survey to a sample population within the entire population to describe the opinions of the population (Russell, 2013). Given the significance and weight of multinational corporations to the development of economies in various countries, a large scale survey will add greatly to the knowledge about multinational corporations in United States. The major advantage of having the large scale survey study is to generalize the results of the findings. During the survey research, sampling will be done to obtain the subset population that could offer meaningful information. Considerably, surveying the entire population is not feasible alternative due to cost and time constraints. For this case, a purposive sampling will be used to obtain participants that would be relevant to the research topic.

The importance of this method is that it is accurate, reliable, good in taking a representative subset of the entire population and thus the results will be generalized to the entire population (Russell, 2013). Data will be collected through questionnaires to gather large information size in a short time. The semi structured questionnaires will be administered to the sample group which will fill relevant information that will be easy to analyse. The data will be analysed through cross tabulation where the data from the different sub groups will be compared. For instance, data obtained from enterprises, self-employed individuals and small-business will be compared against each other to evaluate and interrogate data further.

Significance

The main aim of the current study is to examine the significance of international companies in the United States. Ideally, the operations of multinational corporations impact the economic development of the host state. Thus, investigating whether multinational corporations in the United States contributed to the growth of the economy was essential in providing and unearthing some information regarding the influence of multinational corporations on the Us economy in different ways. Ideally, little research has been done on the role of multinational corporations in developed countries such as United States. Most of the researchers have focused on the role of multinationals in developing countries.

The study will also disclose the significance of FDI and how it has facilitated US economy recovery after recession. As such the results of the study have the potential to inform the government of the United on the relevance of multinational corporations in the country. Thus, this study will provide important data that will be a facilitator of cheering growth of international companies which are deliberated as an alternate of local venture instead of assisting in enhancement of economic progress as well as development. The study is essential since it generates information regarding the relevance of multinational corporations which is crucial for the government as well as policy makers. The research is important to the United State government officials since it adds knowledge concerning the effectiveness of multinational corporations on the home country economic growth.

Considerably, the United States has focused more on recovering from recession. This study will demonstrate the importance of multinational companies and foreign direct venture in shaping the economy which further enables economic growth in the nation. In so doing the government officials will stand to find the research informative and may influence how they connect with multinational corporations in the country. The study will also be important to the multinational corporations in the United states since they will gain internal knowledge concerning their potential in shaping the country’s economy and social development. Furthermore, the research will offer crucial information on how multinational corporations can benefit the host country through operations in International trade.

The information generated during the study will reveal the importance of multinational corporations which will assist the government and the policy makers in the US including the president and Congress to implement better policies that will facilitate the engagement of multinational corporations. The study is also significant to since it offers information to future researchers and may enable them develop their own research that is related to the topic on the role of multinational corporations. Relatively, it will serve as a good source of information that will be essential for their literature reviewing their studies as they try to familiarize themselves with the problems surrounding the study topic. The study also helps in attracting the attention of scholars on the topic and inspire them to research more on the topic.

 

 

 

References

Almfraji, M. A., & Almsafir, M. K. (2014). Foreign direct investment and economic growth literature review from 1994 to 2012. Procedia-Social and Behavioral Sciences, 129, 206-213.

Azman-Saini, W. N. W., Baharumshah, A. Z., & Law, S. H. (2010). Foreign direct investment, economic freedom and economic growth: International evidence. Economic Modelling, 27(5), 1079-1089.

Basu, P., & Guariglia, A. (2007). Foreign direct investment, inequality, and growth. Journal of Macroeconomics, 29(4), 824-839.

Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International Business). Routledge.

Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy. Edward Elgar Publishing.

Fortanier, F. (2007). Foreign direct investment and host country economic growth: Does the investor’s country of origin play a role. Transnational Corporations, 16(2), 41-76.

Haskel, J. E., Pereira, S. C., & Slaughter, M. J. (2007). Does inward foreign direct investment boost the productivity of domestic firms?. The review of economics and statistics, 89(3), 482-496.

Heidenreich, M. (Ed.). (2012). Innovation and institutional embeddedness of multinational companies. Edward Elgar Publishing.

Heidenreich, M., Barmeyer, C., Koschatzky, K., Mattes, J., Krüth, K., & Baier, E. (2011). Multinational enterprises and innovation: Regional learning in networks. Routledge.

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