Discuss the extent to which a large corporation might influence the economic health of a developing country. Give an example.


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When major oilfields were discovered in the Middle East in the 1960s, large corporations and oil conglomerates moved in to countries like Saudi Arabia with the offer to bring investment dollars, technology and engineering to develop the new resource in partnership.  The hundreds of millions of dollars that followed that offer fundamentally changed the economy of Saudi Arabia in a single decade, and took it from a developing nation to one of the wealthier economies in the world by the mid-1970s.

In another example, consider the effect the Wal Mart Corporation has had on the nation of China.  While there are certainly dozens of American companies invested there, Wal Mart is a good example of the effect such a large company can have on one country.  By only offering large contracts to companies willing to relocate their factories to China, they have singlehandedly brought tens of thousands, if not hundreds of thousands of jobs to their economy.  In this way, as employment, income, and spending power rise in what was a developing country, it helps to transform their economy into a much more modern, more wealthy power, and raise the overall standard of living and quality of life for the average Chinese citizen.

There are, of course, limits to the amount of influence one company can have in most countries, especially in countries as large as China. But in the case of smaller nations and smaller economies, Such as The Congo or Azerbaijan, one large investment company can almost transform an entire economy, particularly if there is a resource there to develop and not simply an inexpensive labor pool.

I've included some links, including one to a very good book about American oil companies in Saudi Arabia called Secrets of the Kingdom, by Gerald Posner.

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