Public Consequences of Private Action: The Marketing of Infant Formula in Less Developed Countries

by James Post, S. Sethi



Activities of multinational corporations (MNC) in less developed countries (LDC) have been justified on many grounds. The foremost among benefits accruing to the less developed countries are the transfer of superior technology and management skills; the creation of jobs and of a broader economic base and so, an improved standard of living; and the provision of superior goods at reasonable prices. These benefits are possible because multinational companies operate from a large base of resources, thereby exploiting economies of scale and, because MNC research and development facilities ensure superior products through in-house testing and quality control. Consumers in LDC usually do not have either the information or necessary skills to evaluate the multitude of new products that are introduced by MNC. These products are quite often outside their cultural frame of reference and so evaluation through comparisons with local products is not possible. The small size of total demand makes it unattractive for more than one or two companies to compete for the market.

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