Private, Public and Global Enterprises — Business Studies STD 11 Commerce — Question

Yes, Multinational Corporations (MNCs) are considered a mixed blessing to the developing countries because of their positive as well as negative aspects.
A host country gets benefits in the following ways from an MNC:

1. Creating Employment Opportunities An MNC operates on a very large scale and requires a large number of manpower. Also, they offer good salaries and career development opportunities. This creates lots of employment opportunities in the host country.
2. Inflow of Foreign Capital When an MNC opens its branch in the host country, it invests huge amount of financial resources in the country. This results in inflow of foreign capital in the country which helps in the economic development of the country.
3. Source of Advanced Technology MNCs are a source of advanced technology for the host country. These corporations have their own Research and Development (R&D) department, which is constantly engaged in innovating and discovering new technology. The host country gets the benefit of new technology without additional cost.
4. Improves Standard of Living The MNCs provide better employment opportunities and good quality products and services. This helps in improving the standard of living of the residents of the host country.
5. Helps in the growth of Domestic Firms MNCs facilitate the growth of domestic firms in two ways

1. Firstly, the domestic firms also improve the quality of their goods/ services in order to compete with the MNCs.
2. Secondly, many ancillary units are opened to supply manufactured raw material needed by MNCs.

6. Global Economy MNCs work on the principle that the world is one big global village. MNCs help in the integration of the domestic economy with the world economy.

An MNC adversely affects the host country in the following ways:

1. Disregard the National Priorities The MNCs invest in a country to benefit from its resources. They completely disregard the national priorities of the host country.
2. Deplete Natural Resources The MNCs use the scarce resources of the host country for their own benefit. This home results in depletion of the natural resources of the country.
3. Create Monopoly Powers The MNCs promote the creation of monopoly powers in the host country, as the domestic companies do not have resources or the technology to compete with them.
4. Transfer of Obsolete Technology MNCs usually transfer obsolete or outdated technology to the host country. New technology is used by them in their domestic country.
5. Create Threat to National Sovereignty MNCs exercise a very strong influence on the politics of a country. They try to influence the politicians so that they take such policy decisions that benefit them. This can create a threat for the national sovereignty of the country.