SameerShehad's Waterfall
Mattel, an american toy company, abuses their labor force in China all thanks to foreign direct investment. The link is to an article on Mattel's abuse.
FDI can lead to an MNC using up the host nation's resources. Rather than using their own nation's resources, they resort to nations with cheaper and more abundant raw materials for a more efficient production. Taking away a countries materials only benefits the MNC's as they receive revenue from their host's resources. This results in injustice for the people as the land is their's and not the MNC's who are taking advantage of these materials. Countries should benefit from their own resources and not exploit other less developed nations.
By allowing MNC's into the country, the people are subject to being used as labor for the factories, decreasing the income levels. As the income levels decrease, the society workers will be in poverty as they are underpaid by the MNC's. Also, having MNC's will negatively affect the impact of the headquarter nation, as jobs will not be created for their fellow countrymen who demand higher wages, but rather workers from other nations who demand lower wages. The United States for instance relies a lot on investing in China for production. They open factories there and hire cheap workforce outside the country, rather than creating jobs for their own people back home. Apple products are produced in China due to the workforce wage discrepancy, however, many jobs can be created in the U.S. if they do not invest in China. That is why foreign direct investment has a negative impact on an economy.
