Assessment of the Role of MNCs in the Process of Manufacturing Industry Globalization

Abstract

The development of economic globalization is commonly linked to the activities of multinational companies (MNCs) that are the main participants of the process of globalization. Activities of MNCs are very prominent in the manufacturing industry. MNCs that operate in manufacturing transfer their production to foreign countries that are closer to raw materials, labor resources or consumers in order to reduce production costs or find new sales markets. In this way, manufacturing MNCs “push” the process of globalization and have a significant impact on the development of manufacturing in host countries. Considering the expansion of international production and trade, manufacturing MNCs can be treated as the key channel for the transmission of globalization. This paper analyzes the role of MNCs in the process of manufacturing globalization applying the concept of cause and effect. After the analysis of the nature of MNCs’ activities, two groups of indicators have been selected and systematized following the cause and effect attitude: (1) the indicators that reflect the input of MNCs in the process of manufacturing industry globalization; (2) the indicators of manufacturing development that reflect the impact of globalization transmitted through the channel of MNCs. On the basis of indicators selected, the empirical research is conducted on an example of a small open economy.