Role of mncs

MNCs may damage the economies of the underdeveloped countries because their superior knowledge, worldwide contacts and advertising skill inhibit the emergence of small-scale local enterprises.

Multinational corporation

Moreover, the advantage of investment by MNCs lies in the fact that servicing of non-debt capital begins only when the MNC firm reaches the stage of making profits to repatriate.

The country relied on external commercial borrowing for development of sectors of economy. We think this trend is very desirable for increasing international collaboration and for improving world peace. For examples, it has been found that giant American and European firms set up production units to explore and refine Role of mncs in Middle East countries because oil is found there.

The investment in infrastructure will give a boost to industrial growth and help in creating income and employment in the India economy.

Role of Multinational Corporations (MNCs) in Foreign Investments

Besides, it is through multinational corporations that modern high technology is transferred to the developing countries. Then there is Role of mncs question of repatriation of profits by the multinationals.

Use of Capital-Intensive Techniques: They transact business in a large number of countries and often operate in diversified business activities. Since source of bulk of foreign capital and investment are multinational corporations, they have been allowed to operate in the Indian economy subject to some regulations.

With the tightening of environmental measures in such countries, there is a tendency among the MNCs to locate the polluting industries in the poor countries, where environmental legislation is non-existent or is not properly implemented, as exemplified in the Bhopal gas tragedy. These prices of components or parts are not real prices as determined by demand for and supply of them.

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Such goods are quite inappropriate for a poor country like India. MNCs promote professionalisation management in the companies of the host countries.

Moreover, many intermediate goods are supplied by Indian suppliers to Maruti Udyog and for this many workers are employed by them to manufacture various parts and components used in Maruti cars. The MNCs integrate national and international markets. Growth of MNCs help in improving the balance of payment status of the host country.

Moreover, the advantage of investment by MNCs lies in the fact that servicing of non-debt capital begins only when the MNC firm reaches the stage of making profits to repatriate.

This tide of corporate level competitive interdependence and global alliance activity is gradually becoming a significant element in the world economy. Transfer Pricing and Evasion of Local Taxes: In other words, increased mobility of multinational corporations benefit capital while workers and communities lose.

They artificially inflate the transfer prices for intermediate products i. It is alleged that India has been made a dumping ground for obsolete technology.

What is the Role of MNCs in Developing Countries?

However, in case of Pepsi, a famous cold drink multinational company, while for getting a product license in to produce Pepsi Cola in India it agreed to export a certain proportion of its product, but later it expressed its inability to do so. They transact business in a large number of countries and often operate in diversified business activities.

This raised the burden of external debt and debt service payments reached the alarming figure of 35 per cent of our current account receipts.

Because of their huge resources. The current account may deteriorate due to large-scale import of intermediate goods and Role of mncs account may worsen because of repatriation of profits, interest, royalties, management fees, etc.MNCs have contributed significantly to the development of world economy at large.

They have also served as an engine of growth in many sub-Saharan countries. Therefore, MNCs can play an important role in the technological up-gradation of the Indian economy. 4. Promotion of Exports: With extensive links all over the world and producing products efficiently and therefore with lower costs multinationals can play a significant role in promoting exports of a country in which they invest.

MNCs help a developing host country by increasing investment, income and employment in its economy. 2. They contribute to the rapid process of development of the country through transfer of technology, finance and Tnodern management.

Another role can be seen in the increase of money circulation in the economy. MNCs’ activities are very likely to result in profit maximization because one company can provide same service and implement same strategies in several countries (The Economist ).

Role of Multinational Corporations in the India Economy: Prior tomultinational companies did not play much role in the Indian economy. In the pre-reform period the Indian economy was dominated by public enterprises. Some important roles played by MNCs in India are as follows Transfer of Technology The most important role that MNCs play in India and across the globe is the transfer of technology.

Transfer of state of the art technology to developing countries increases the quality and productivity of the output produced.

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Role of mncs
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