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.