Negative impacts of multinational corporations

Written by dave stanley
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Negative impacts of multinational corporations
Multinational corporations dominate both the city skyline and the global market. (Thomas Northcut/Photodisc/Getty Images)

In an era of globalisation, multinational corporations are increasing in number, and there are no shortage of opinions about their presence. Some people welcome them since they can be good for economies, consumers and capitalism. However, they do have a negative side as they aren't always as good for economies as they initially appear.

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The perils of outsourcing are well documented as it has led to significant job loss in the U.S. However, there is also another negative impact. Multinational corporations' presence in other countries often doesn't benefit the economies of these countries as poverty continues to rise in spite of the additional jobs that don't pay that well. Moreover, multinational companies aren't subject to the same environmental and labour laws as they are at home.

Development Gap

The development gap between the extremely wealthy and the extremely poor continues to widen in foreign countries where multinationals conduct business. Much of this is because capitalism, through foreign trade, tends to be exploitative of less developed countries. Multinationals often tout the global benefits their presence provides, but the fact remains that the gap between rich and poor has not closed.

Environmental Impact

Multinational corporations have a reputation for leaving a large carbon footprint when they enter other countries with looser environmental regulations. This disregard for the environment, whether through greenhouse gas emissions or polluting native habitats, poses a significant negative impact from the cost of doing business. Moreover, conducting operations on a global scale uses up resources, such as energy and fossil fuels.

Small Business

Small businesses often struggle in the shadows of multinational corporations. At best, they are able to survive the competition, or they could be bought out. If they decline, they run the risk of eventually going out of business, which can happen all too often since multinationals are able to offer high volume deals and discounts that small businesses can't match. Customers may want to support the local companies, but price often trumps sentiment.

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