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Existing Theories Of Multinational Companies Economics Essay

In recent times, emerging economies have surprisingly produced their own indigenous multinational companies. This development is described as surprising, simply because neither earlier economic theories nor more recent theories of the multinational enterprise anticipated such a development. Theories suggest investments should flow into, and not out of deprived countries, and also that companies attain the multinational status particularly as a result of innovations which are expected to be present in highly developed countries, rather than in emerging economies (Goldstein, 2007). However, these assumptions have been increasingly challenged by multinational companies from countries like India, China, South Africa, Brazil, Egypt and in this particular case Nigeria.
Companies from most of the countries mentioned above are a combination of manufacturing and service companies, which include the likes of Ranbaxy, an Indian pharmaceutical company, Lenovo a Chinese computer manufacturer, such as Tata, Wipro, and Infosys all Indian technology services companies, South African brewer SAB-miller, Brazil’s Embraer, one of the world’s leading aircraft makers and China’s Huawei Technologies Co. Conversely, the highest proportion of Nigerian companies expanding to foreign countries are Nigerian Banks. A considerable number of which now own and operate branches or subsidiaries in various countries within the West African region and beyond. The multinationalisation of these banks represents the main focus of this study, with a microscopic look at the challenges they face and the impact of internationalisation on their performance. But before I proceed, I present some empirical data about the magnitude of multinational banking amongst Nigeria banks, highlighting the name of the bank, country where they are located, the type of presence and the year of first entry into the country.
Table here: 2.1 Existing theories of Multinational Companies The internationalisation of companies has been studied using various contextual frameworks. Over time, numerous authors from different disciplines such as economics, business management, and sociology have examined this trend among companies, particularly those from developed economies. According to research, a company may engage in international business through importing and exporting, the licensing or sale of technology, foreign management contracts, trade of turnkey projects, strategic alliances, or through Greenfield foreign direct investments. The eclectic paradigm, behavioural models, dynamic capabilities and resource based view, the monopolistic advantage and product life cycle, are all examples of theories which have been developed to explain the internationalisation of firms.
2.2 Definition of Multinational Banking A bank may be typically defined as an institution where people and other institutions can invest or borrow local or foreign money. Mark Casson (1990) suggests that the definition of a bank varies depending on the context of analysis. He describes a bank as “an institution specializing in the purchase and claim of currency, or claims to currency”. Banks sometimes specialise in various activities, as banking can be segmented, hence it is not a standardized activity. According to Casson (1990), banking consists of a group of unique but related activities which can, and are often conducted by different individuals, in different locations. Therefore, as banks conduct there core banking activities such as receiving deposits, giving out loans, and exchanging currency, they also provide such services as the issuing of notes, securities services, clearing and settlement related services and so on. Casson (1990) then describes the Multinational bank as “a bank that owns and controls banking activities in two or more countries”. This definition of the multinational bank is widely encompassing, as it stresses the importance of not just owning banking activities in another country other than the home country, but the bank in question must also control (manage) such banking activities, meaning there has to be some kind of modification in the bank’s organisational configuration. Hence, these definitions will be adopted for the purpose of this study.
2.3 History and Evolution of Multinational Banking It is important to note that multinational banking is not a new phenomenon. According to Jones (1990), multinational banking occurred in two waves. The first of which emerged in the 19th century, with British banks being the broadest example. Appearing in the 1830s, British multinational banks operated with headquarters in Britain, but seldom conducted domestic banking activities in Britain. By the early 19th century they had set up huge branch networks in parts of the British Empire, particularly in South Africa and Australasia. The international expansion of banks varied from country to country. Other banks from different countries like Germany soon followed the British banks, with branches in London and subsidiaries in different locations such as Asia and Latin America. However, the multinational banks from Germany were mostly established by major German domestic banks through consortiums. Multinational banks from France adopted a comparable approach to multinational banking as their German counterparts; they too were set up by domestic banks. On the other hand Japanese banks foreign expansion was highly facilitated by the Japanese government in response to western initiatives (Tamaki, 1990). Surprisingly, American banks weren’t very active in international banking in the 19th century. Swiss banks are believed to have also had little international presence during this period, though they undertook international banking activities. Cassis (1990) suggests that this may have been due to Switzerland’s lack of colonial activities, a phenomenon closely linked with multinational banking during the 19th century.
Some major characteristics of multinational banking during the 19th century were highlighted by Jones (1990). Firstly, most of them focused on setting up branches in developing countries; Secondly, multinational banks offered diverse banking services in their foreign branches, such as trade finance, investment banking and domestic retail banking services; Thirdly, banking across borders extended into multinational investments in other sectors. For instance, Barings Brothers

Effects of unemployment in sri lanka

1. Many researchers have been conducted regarding unemployment in Sri Lanka, among them are unemployment and crimes, unemployment due to skills mismatch, and unemployment due to existing education system and so on. But after reading those studies it is evident that among the graduates of the country, Arts graduates face this problem seriously due to their skills mismatch with the current job markets.
2. The word ‘mismatch’ is used normally in earlier research about the Sri Lankan unemployment problem, and it is important to explain the different contexts in which this term exists. There were some troubles to make a distinction between them. There exists a mismatch on the labour market where the demand for educated labour is less than the supply of it. This is a practical fact, since this mismatch is reflected in the high rate of unemployed educated youth. In other words, there are fewer jobs with educational requirements than the supply of educated workers. The logical outcome of this is unemployment. There are, however, different kinds of hypothesises developed to explain this 15 kind of mismatch and one of them is called the mismatch theory. Here will try to give a brief summary of the different explanations below. The high rate of unemployment in Sri Lanka has concerned researchers, policymakers and the international community for a long time, which has resulted in a lot of researches and literature in the topic. Several explanations have been proposed and the most accepted explanation though is the skills mismatch theory hypothesis. It was first spoken by the International Labour Organization (ILO) in the 1970s and was further researched by Glewwe(1987) and Dickens and Lang (1996) .This theory suggests that the educational system of Sri Lanka does not produce the skills that are valued by the employers. At the same time it raises the expectations of those who acquire them. This means that the unemployed are not interested in the available jobs. At the same time the employers will not hire them since they lack the skills needed. This hypothesis argues that the reason for the high rate of unemployment among the first job seekers is that this group has just finished schooling, and has therefore not developed the skills needed out of earlier work experiences. This theory suggests that in order to defeat the unemployment problem, the educational system needs to be reformed through skills development and vocational training with more connection to the labour market. Another explanation to the unemployment problem is the queuing hypothesis linked to public sector employment and wage policies. This theory is also suggested by Glewwe (1987), and was developed by Bowen (1990) and Dickens and Lang (1996). They argue that public sector workers have a lower wage than those in the private sector in a well functioning labour market. This is so because of compensation for greater stability, attractive benefits and prestige and lower work efforts that exists in the public sector. This is not the case in SriLanka though, were the public servants both get all the mentioned benefits and a higher pay. As a consequence, the fresh graduates prefer to wait for the jobs in the public sector and hereby choose to stay unemployed for a while instead of taking jobs outside the public sector. This hypothesis can therefore be seen as a Mismatch between expectation and available jobs. The solution to this type of problem is to reform the way the public sector recruits their staff and establish wage policies to stop this queuing behaviour. They also find that there is substantial evidence of labour market segmentation which provides a rationale for the unemployed to wait for so-called “good” jobs. The third explanation is that the labour market regulations create a wage. This explanation is connected with Rama (1994) and suggests that the labour market regulations discourage employers to hire new staff in their enterprises since they make it very hard to terminate unwanted workers. The Termination of Workmen Act (TEWA) is regulating enterprises with at least 15 employees and provides life long tenure. Small firms with less than 15 workers have on the other hand no job security at all. The same goes for the Export Processing Zones (EPZs). This is a duality that means that the unemployed prefer to wait for the regulated jobs. The solution would be to reduce the wedge between TEWA protected and the unprotected jobs.
LITERATURE RELATED TO THE STUDY What exactly is a Bachelor of Arts Degree? 3. “The Bachelor of Arts degree (B.A) is distinguished by its humanistic emphasis. Students who complete a B.A may satisfy the degree requirements by taking courses that advance their understanding of human culture through analysis of ideas, perception of differences, appreciation of art and creative products through understanding art forms, beauty and symmetry, knowledge of theories and principles of form, substance, argument and philosophy, understanding of the interaction between language”
Why is a Bachelor of Arts Degree Valuable? 4. The demand for applicants possessing Bachelor of Arts Degree can only go up. As globalization spreads, businesses now spend a lot of time working with cultures very different from our own. China, India, Southeast Asia, and Africa all offer an enormous amount of business Opportunities for business and employers able to adapt. Tangible skills are great in global economy. Engineers, for example, will always be needed to build bridges or study to structure of buildings. However, there are certain skills inborn to a Bachelor of Arts Degree that makes it valuable commodity in today’s market.
a. Critical thinking skills: The ability to solve problems using information at-hand and to generalize information
b. Argument skills: The ability to use logic and facts to persuade others.
c. Communication skills: The ability to express one’s views clearly in oral and written presentations.
d. Information Management: The ability to sort and interpret data.
e. Designing and Planning Skills: The ability to look critically at a problem from different perspectives and identify alternative solutions.
f. Research and investigation skills: The ability to find and formulate information.
g. Management and Administration Skills: The ability to analyze tasks, set priorities, and communicate goals to others.
Meeting the Growing Demands for Higher Education in Sri Lanka 5. Hon. Dr. Sarath Amunugama, Minister of Public Administration and Home Affairs and Deputy Minister of Finance highlighted that the higher education in Sri Lanka face challenges due to mismatch of the education system and employment opportunities. Sri Lanka being a middle income country has a demographic boom due to investments in social welfare, health and education. The elimination of malaria, improved maternal and child healthcare and other health sector services led to a population boom. This leads to high demands for education. According to him approximately 20,000 enter the Universities in the country and another 10,000 go abroad for study. This cause a financial burden and stress to the public. Even though Sri Lanka is classified as a middle income country, according to Dr. Amunugama, if the population was halved then it could be classified as an upper middle country. In this backdrop the future of higher education must be considered. The low percentages of Science and Commerce streams in schools were indicated as a critical issue. He also noted that 150,000 youth found jobs in forces and another one million youth were working abroad. He stated that there exists a severe mismatch of education and employment. Because the graduates, especially in arts and humanities, are unemployable as they demand government jobs. In the graduate employment scheme, 44,000 graduates were given employment. Approximately 10,000 who were then already employed in the private sector jobs preferred the government jobs offered by the scheme. He pointed out that rapid growth of the private sector is crucial to overcome the scenario. The graduates have to be absorbed to the private sector or they should seek employment abroad. He also noted that the government institutions have too many employees. He highlighted that we should focus on areas that has opportunities. Demand and supply situation should be considered in areas of higher education. He stressed the importance of teaching IT to meet the requirement of the job market.
UNIVERSITY EDUCATION 2004-2009 6. Details of university education from year 2004 to 2009 show the following table.
No of Universities
No of Students
No of lecturers
New Admission for Basic Degree
No of Graduates,