Multinational Corporations and Economic Development - A Descriptive Survey of International Petroleum Companies in Developing Countries

Abstract

Multinational corporations in oil industry played an important role in the economic development strategies of many less developed countries. The modern oil industry was developed almost entirely by seven large companies, each with a colorful history of its own. They were privately owned and traditionally were taking the entrepreneurial risks of exploring for, discovering and distributing oil resources. For almost half a century they were controlling the world´s oil supply, directing its worldwide distribution and marketing, and deciding the amount of revenue sharing between them and producing, mostly less developed countries. This paper contributes to the literature concerned with multinational corporations’ contribution to the national economies of less developed countries. Results from a study examining the development of the international oil industry over a period of seventy years reveal that the oil companies were exploiting oil resources of the less developed countries by damaging national economies. It also shows that the policies of the oil companies were affected by both the developed Western and the less developed African, Asian and Latin American countries. General conclusion is that multinational corporations could make greater contributions to economic growth and development of all countries provided that some of the sources of discrimination and conflicts could be eliminated.