Spill over effects are externalities of economic processes that affect the parties who are not directly engaged in production (Johnson 23). Spill over effects are positive if they are beneficial to the public and negative if they have undesirable consequences to the environment. The top ten multinational corporations have both negative and positive externalities to their home and their host countries. Despite this, the spill over effects from the top ten Multinational corporations promises sustainable development for the local industry in East Asia (Johnson 31). The top ten MNC’s and their respective countries are illustrated in the table below.
Corporation Country
ICBC Bank China
Samsung South Korea
Petro China Corporation China
Sinopec China
Hutchison Wampao Limited Hong Kong
Jardine Matheson Hong Kong
Canon Japan
Bridgestone Australia
Epson Japan
Huewei Technologies Limited China
Spill over effects lead to economic development since multinational corporations transfer and accumulate technology and capital in the home countries (Johnson 37). Production processes are both labour and capital intensive. This leads to massive employment of the home country citizens and installation of machinery, which lead to increase in gross domestic product (Johnson 43). Increased investments in a country may attract international trade and give a company access to cross-border markets, thus increasing exports that benefit the whole country. The home country’s balance of payment becomes favourable and the citizens stop suffering the adverse effects of public debt.
The major negative effects of spill over include environmental degradation and possible loss of jobs in the home country. Multinational corporations venturing in other foreign markets may face conflicts from local governments concerning environmental effects of their production services (Johnson 45). Making up for these environmental costs may be expensive for the company and reduce its profitability. Venturing in foreign countries also reduces employment opportunities in the home country.
The table and graphs below illustrate the economic growth in countries of East Asia including Australia, China, Japan and Korea.
Line graph showing the contribution of Petro China Corporation to the Chinese economy
Samsung’s growth of stock between the year 2000 and 2012, and projected growth up to 2050.
The graph showing economic growth in Australia between 2008 and 2010
Line graph showing China’s growth in GDP between 2000 and 2012
Work Cited
Johnson, Drew. International Directory of Company Histories: Volume 116. Detroit, Mich: St. James Press, 2011. Internet resource. Print
