Harmful effects of advertising by transnational corporations

Advertising does more than merely sell products and form consumption patterns: it informs, educates, changes attitudes, and builds images. Advertisements may create needs by suggesting unnecessary uses for products, or through needless product differentiation and packaging. Sometimes the elaborate packaging characteristics of products of transnational corporations, associated with attempts to achieve brand distinctiveness, accounts for a significant part of the cost of the product.

[Developing countries] Advertising may facilitate the transfer of consumption patterns of developed countries to developing ones, by introducing needs which may not be appropriate, given the income and demand structure in these countries. Other unfavourable implications can arise for the developing countries as a result of misleading advertising which does not reveal the harmful effects of some products of transnational corporations which, although banned in the developed market economies, are available in the developing countries because of insufficient regulation. In addition, with respect to the advertising of drugs and food products, numerous cases of exaggerated claims about the benefits of particular products have been reported in many developing countries, including false and misleading statements and inadequate directions for use.

Furthermore, aggressive advertising campaigns by transnational corporations in developing countries may have adverse effects on local competition. The affiliates of transnational corporations may be able, through advertising, to displace domestic enterprises in the consumer goods industry, where transnational corporations do not always have major advantages to offer to the domestic economy.