Multinational Corporations’ Key Stakeholders in the Economic Development in Less Economically Developed Countries: A Literature Review

Abstract

This paper examines whether multinational corporations (MNCs) are essential stakeholders in economic development. Over the years, MNCs have been considered necessary for achieving socioeconomic development, especially in less developed countries (LDCs). However, some literature argues that the presence of MNCs in LDCs has limited benefits for society. This has been premised on the notion that they have failed to help address social ills, such as unemployment, poverty, and inequality, and have been able to achieve undue influence with the politics of LDCs. This paper employs the stakeholder theory to assess whether MNCs contribute to economic development and foster collaborative relations within their communities. This paper used secondary data (through a literature review) to collect relevant information. It was revealed that host governments have limited associations and, to a great extent, control how MNCs conduct their business. While MNCs have been lauded for foreign direct investment inflow, such inflow has often not translated into tangible development for some countries. Furthermore, in developing regions, the lack of adequate legislation, and widespread inequality, corruption and poverty makes it difficult for the potential benefits of MNCs to be realized. Leveraging the potential benefits of MNCs needs to be supported by the relevant legislation and political will, something lacking in many developing countries.