Chapter 7.

Multinational Corporations
7.2. Role of MNCs in Developing Countries

MNCs help a developing host country by increasing investment, income and

employment in its economy.
They contribute to the rapid process of development of the country through
transfer of technology and finance management
MNCs promote professionalization management in the companies of the host
countries.
7.3. Drawbacks and Conflict

Drawback of multinational corporations in developing countries

Environmental imbalance
Uncertainty
Control
Transfer pricing
Killing domestic producers
Profit repatriation
Skilled labor
Raw materials
Sweat shop labor
 Cont…
• Different challenges faced by the multinational companies
Market imperfections
Tax competition
Political instability
Market withdrawal
lobbying
7.4. FDI and Portfolio Investment
• Foreign direct investment is building or purchasing businesses and
their associated infrastructure in a foreign country.
• Direct investment is seen as a long-term investment in the country’s
economy.
• Portfolio investment can be viewed as a short-term move to make
money.
 Assignment Three
 Explain multinational Corporations types, advantage and disadvantage
 Describe the role of MNCs in Developing Countries
Which is better FDI or Portfolio investment