Multinational Corporations are considered a mixed blessing to the developing countries (2024)

FAQs

Multinational Corporations are considered a mixed blessing to the developing countries? ›

This is because it has a great number of advantages as well as disadvantages for the developing countries. The advantages are: transfer of technology (the country gets the technology from other countries other than importing goods from other country) increase in investment and due to which employment increases.

Multinational Corporations are considered as mixed blessing to the developing countries because of its both positive and negative aspects. (i) It helps in creating employment opportunities in host countries. . (ii) It speeds up the process of economic development as it facilitates foreign direct investment.

Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply.

Benefits of Multinational Corporations

Create wealth and jobs around the world. Inward investment by multinationals offer much needed foreign currency for developing economies. They also create jobs raises expectations of what is possible.

Multinational companies create employment opportunities. They also tend to pay more than local firms in host countries. Training programmes will also improve the quality and efficiency of local workforce. Therefore, more of the local workforce will be employed to work in the multinational companies.

Using capital from developed countries, MNCs establish factories and plants in developing countries, where they can access raw materials and labor more cheaply. The finished products are then shipped back to wealthy countries where there is a consumer market.

They bring new innovations and technological advancements to the host country. They help modernize the industry in developing countries. MNCs also reduce the host countries dependence on imports. Imports reduce while exports from the country see a rise.

MNCs are neither good nor bad. Those who deal with them as employees or customers need to know what they are, so they can handle them properly. A MNC (or any company for that matter) exists to make profit for its shareholders. They don't exist to benefit the employee or to even benefit their customers.

Advantages: Multinational enterprises can access new markets and resources, benefit from economies of scale, and diversify their operations. Disadvantages: They may face cultural and regulatory challenges, increased competition, and potential negative impacts on local economies and environments.

One benefit of multinational corporations (MNCs) is that they will contribute to the country's increased trade. It will aid in boosting a country's economy. It will give more individuals in a country job chances. One of the MNCs' drawbacks is that they can endanger small and local firms.

What are the 4 roles of a multinational corporations in the economy? ›

These corporations, with their extensive resources and global reach, have the ability to shape economies, create jobs, spur innovation, and contribute to overall economic growth.

Through their involvement in investing in local startups, MNCs can play an important role in building an entrepreneurial ecosystem in developing countries and, if done correctly, might solve the typical coordination failure that most governments struggle or are unable to cure.

They help in the transfer of capital from nations where it is plenty to those where it is lacking. They contribute to the expansion of knowledge and the development of human resources. MNCs not only market their products globally, but they also manufacture their services and products internationally.

MNCs are major actors in international relations and help facilitate globalization through their business activities, including foreign direct investments. They also attempt to influence the foreign policy of countries so the policies align with their own interests.

These entities collectively are responsible for large portions of world production, employment, investment, international trade, research, and innovation.

Economic Growth and Investment: MNCs can inject significant foreign direct investment (FDI) into a country's economy, which can stimulate economic growth. This investment can fund new industries, infrastructure development, and job creation, leading to increased economic activity.

This is essential for combating poverty. A dynamic private sector seeking to maximize profits (Lodge & Wilson, 2006), generate employment and raise income (CEPAL, 2015), allows to offer better quality goods and services at a lower cost, and at the same time pays taxes.

The results indicate that access to markets, labor market conditions, state promotional efforts to attract foreign investment, and state and local personal taxes are significant fadors in the location decision.

The host country's perspective

Jobs created as a result of FDI inflows are good from the country's perspective because their productivity is above the country's average and they are likely to increase expertise within the economy. This is because multinationals are creators of knowledge.

A multinational state or a multinational union is a sovereign entity that comprises two or more nations or states. This contrasts with a nation state, where a single nation accounts for the bulk of the population.