MNC and FDI
Reasons for the emergence of MNC/FDI
Advantages
Disadvantages
More job opportunities
More investment in infrastructure
Developing skills and capital
Contributing to taxes
Tax avoidance
Environmental destructions
Contributing taxes the profits made by MNCs are taxes by the host nation. This increase tax revenue2 for the government services, and also the arrival of MNCs will help to boost the stock of capital in host countries.
More profit abroad
The Definition of MNC and FDI
Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy.
MNC is a company that has business operations in at least one country other than its home country.
Economics Of Scale
Access to natural resources/cheap material
Lower transport and communication costs
Acsess to the customers in different regions
MNCs provide training and work experience for workers when they locate operations in foreign countries.
Countries with poor infrastructure often struggle to attract FDI. If a country has inadequate road networks. ports, railway networks , bridges, power distribution, airports, telecommunications, industrial parks, and other facilities it is more difficult to do business.
This means that profits are returned to the country where the MNC is based. As a result, the host country loses out. This suggests that MNCs bring more benefits to developed countries than to less developed countries. This is because the headquarters of most MNCs are based in developed countries.
Tax avoidance particularly by powerful MNCs, has attracted the attention of the world's media in recent years. However, the MNCs have frequently responded to these accusations by saying that they pay their taxes and have done nothing wrong.
Many environmental are suspicious of MNCs because they may cause environmental damage. One reason is because MNCs are heavily involved in the extraction industries such as coal, oil, and gold mining.
When MNc make factories the MNC will hire people, so these will make job opportunities.