Multinational corporations -- MNCs -- are also known sometimes as transnational corporations, or TNCs. These enterprises are legal corporations that operate across borders in at least two countries. These corporations exist throughout the world in countries such as the United States, Canada, France, Egypt, India, China and Japan.
The Oldest Multinational Corporation
The first multinational corporation was established in 1602 as the Dutch East India Company. This chartered company was established by the Netherlands, who granted the body the right to establish colonial projects in Asia. The powers of the company were far reaching, since the Dutch had no real presence in Asia at the time. The company was responsible for law and order, coining money, governing parts of the territory, negotiating treaties, and even making war and peace.
As of the publication date, multinational corporations have a significant global presence, with 52 MNCs ranking in the top 100 largest economies in the world. These international giants have sales that range between $51 billion and $247 billion annually. The trade presence of these corporations is also massive: over 70 percent of international trade is done by the top 500 MNCs. So, while the largest MNCs are concentrated in terms of ownership and workforce -- they make up under one percent of the global work force -- they direct a significant amount of global finance.
Governments and MNCs
Governments throughout the world routinely support MNCs in a number of ways, including through financial incentives such as low tax rates and financial transfers. In the United States, 95 percent of MNCs paid less than five percent in incomes taxes -- and between 1996 and 2000, 60 percent paid no federal taxes at all. Food corporations and farmers are a regularly subsidized group, and in 2005, $283 billion was transferred to agricultural corporations -- most to MNCs -- by the world's most developed nations.
Role in Alleviating Child Labor
Multinational corporations play a role in international development, including improving the welfare of individuals in lesser developed nations. Between 1980 and 1998, child labor rates throughout the world fell by seven percent, from 20 to 13. Locations with poor multinational corporate coverage saw higher child labor rates than those with MNC coverage. Multinational corporations argue that their presence increases local wealth and helps to free children from the burden of premature labor.
- Comstock Images/Comstock/Getty Images