Essay on multinationals

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Essay on multinationals

What currently one of the main issues in the society and government of fast-growing regions is the emergence of new multinational enterprises, its domestic impact on the country where subsidiary companies are supposed to be allocated and its potential consequences of operation on the economic perspective of the host country.

Essay on multinationals

One of the examples of fast-developing region is, for sure, South Asia. To be precise, the case of India will be examined in this work. The role of MNC, from the government point of view, is that subsidiary companies helps to tackle with problems of development described above by investing new money into the circulation of domestic economy of particular country and organizing new workplaces for domestic workers.

As a result of Essay on multinationals FDI, the economy receives a solid base for consecutive economic growth in terms of Gross Domestic Product GDP and sequential development of the region. Many economists consider particular investments to be the most safest one of the proper shape of external finance for developing countries such as India or China due to the fact that they do not involve a considerable risk and have unlimited liability.

It is supposed that a big amount of subsidiaries companies of MNC attract more and more FDI that will definitely support to boost up production of outputs, the level of GDP and to increase the economic growth rate not only for India, but also for the whole south-Asia region due to engagement of India in international trade.

Despite the recent negative impact of the crisis, India still receives a large inflow of investments due to firstly, stability in external Essay on multinationals relationships that leads to getting more stable access to foreign market, secondly, that many consumers wish to use India as its own export platform.

India also abolishes non tariff barriers and quotas regularly, reduce tariffs and open up its service sectors, which means India liberalizes its regime and create more conducive environment for trade and Essay on multinationals investment.

Investors are not afraid of investing into India indeed. They are pretty sure that foreign markets will be available to them on a continuing basis. Sharp economic growth, structural change played the main role in driving the changes in comparative advantage of India and hence, in the overall economic growth of the country.

Multinational Corporations Multinational Corporation may be defined as a company, which operates in number of countries and has production or provide services outside the country of its origin.

In economic context, it is also called as transnational corporations TNC. MNC show both negative and positive impact on the economy of the host country.

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India became a home for a huge amount of subsidiary companies since it started procedure of liberalization. MNC play a significant role in globalization and international affairs associated with the global market. What are the reasons of increase in the amount of new multinational corporations?

The bound between two terms is totally blurred; however, it is easily to be defined: Therefore, MNC seem to follow the idea of cost-minimization and profit-maximization more frequently, through process of outsourcing, at the expense of usage of cheap labor of another country, highly-qualified, reliable workers or even workers with specialized skills.

Moreover, disposition of input-sources are also taken into criteria of outsourcing as it reduces the cost of transportation and as a result, decrease the cost of production. Another strategy of MNC is off-shoring that is more broad term.

The company offshore if they need to have their production getting done much faster through the global talent pool. It helps to lower the cost of goods or services and more easily to hire skilled workers for lesser expanses on wages. Basically, both processes are used on practice in fast-developing countries by MNC.

Impact of multinational companies and its investment on the host country It is quite obvious that disposition of subsidiary company in the host developing country provides the region with a renewed financial foundation for further social and economic growth.

Nevertheless, the host country may undergo through the sophisticated period of dramatic decrease of codes of ethical conduct induced by establishment of a big amount of subsidiary companies. Basically, codes of ethical conduct are involved to operate the demand of developing nation, rather than ensure marginal assistance of economic and social evolution.

Essay on multinationals

As a result, the companies constantly enhance the amount of investments and the host country operates within new capital that is being accumulated through the time. The main advantages and disadvantages of MNC and the impact of FDI must be appropriately identified in order to avoid economic and social misunderstandings.

Advantages From the financial perspective, the most significant favor is the new capital that?? The deficit of balance of payment can be reduced or even removed due to inflow of new capital. New enterprises constantly raise inward investments and if the government is capable to fill savings or inflationary gap with the foreign investments, it may achieve its target of economic growth.

Trade balance is also changing; the country that was the biggest importer can probably become the biggest exporter in a short run. Moreover, as a consequence of capital inflow, the country receives import substitution and also getting their export promoted.

Money that is collected from taxes that are paid by MNC will be one of the valuable sources of tax revenue for the local government. Thence, the government oftentimes attracts companies to locate their subsidiary in a place where the substantial labor supply is resided in order to make employees being locally recruited.

Thirdly, new technologies and renewed methods of production appear regularly due to the fact that multinational corporations transfer a new assets, entrepreneurial knowledge and management experience into the host country.

It also means that employees will be trained to work with new technologies and the local companies will see the benefits. Moreover, multinationals in the host country create a competitive environment on the domestic market; hence, domestic traders and market intermediaries increase their business activities.

Multinational corporations may also manufacture for domestic market, thus, people may get goods and services at a price that is much lower than it is established on imported one, while the variety of goods also increases. Finally, the last benefit is reputation of the host country. Disadvantages Threats and disadvantages of MNC to the host country must also be properly analyzed.

First of all, multinationals do not take into consideration environmental problems obviously because they only follow the aim to minimize the cost of production and to increase their efficiency Secondly, the government policies are more likely to be enslaved by MNC due to their economic power, which lead the country to the wrong course of control inauspicious to development.

MNC are provided with a wide range of indulgences from the side of the government, for instance, low taxes, excessive protection, subsidized inputs.More Essay Examples on Corporation Rubric.

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Essay on Multinational Corporations (MNCs)