MNCs and the Economic Growth of the State of Kedah
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MNCs and the Economic Growth of the State of Kedah

Sudin Haron, Mohd .Basir Saud & Bala Shanmugam

No. 5/1997, ISSN938-1227-19, 13 pages, RM 5.00


Multinational corporations (MNCs) are simply defined as business organizations that conduct their affairs in at least two countries. MNCs are the result of the direct foreign investment policies of the nations they operate in. This paper discuss the growth of MNCs in Malaysia in general and specifically in the northern state of Kedah.


In the literature on direct foreign investment there is considerable controversy about the extent of the contribution of MNCs to the growth of the host country. The pro-foreign investment school pictures multi-national as adding new resources to the host economy (e.g., capital, technology, management, and marketing) in a way that improves efficiency and stimulates structural changes. The opposing, ’dependencia’  school asserts that multinationals will be a disadvantage to host countries because their power is essentially unconstrained and will always lie outside the control of the state. For instance, it is argued that MNCs draw upon local capital for their projects rather than bring in new resources, use technologies which are inappropriate to the needs of the host economy and drive domestic producers out of the market.

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