Does Mncs Doing Good To Our Country

Multinational corporations are large companies which operate in more than one country. Developing countries are the host countries and have become the object of study as there are many questions regarding the benefits of hosting a MNC. Are MNCs contributing to the sustainable development of a developing country? Or, do they simply exploit developing countries creating a country dependent on that MNC for their own economic, social and ecological growth? Apparently they are transferring new technologies to a developing country, the introduction of sophisticated managing techniques, and foreign direct investments. Depending on this point of view, either the MNC brings valuable tools to a developing country which in turn infuses their economy with new jobs and raises the skills of the workers or the MNC fully exploits the developing country exporting the technology, capital and resources back to the parent country or other developed countries for profit.

Present a set of logic in favor of the existence of MNCs in

developing country

 DIRECT FOREIGN INVESTMENT (DFI):

MNCs help increase the investment level and thereby the income and employment in the host country. MNCs build up factories, office buildings, warehouses, etc. in the developing countries as a form of subsidiary investment. This results in a large scale flow of funds into the developing country, which is good for the developing nation as it is bringing in a gross amount of foreign currency into the country.

We know that DFI is a component of Capital Account. At macroeconomic level, FDI may significantly contribute to finance current account deficits in the balance of payments of host countries. Though the improvement of balance of trade is an argued topic but apparently it is good for the economic growth of a country.

 Create Employment:

From the perspective of a developing country, establishing a MNC is beneficial in the sense that it creates a huge chance of employment for the labor force of the nation. It increases the employment rate as more people get employed in the newly setup company. As a result, the unemployment rate of the country is also reduced as an after-effect of the increased employment. Hence, MNC provides employment.

MNCs can raise employment standards: they can pay better wages than local firms and their environmental and health and safety protocols can set the standard for local practices. MNCs can boost economic development by transferring technology and knowledge to local economies.

 Economic Growth:

The large MNCs that crop up in the developing country is all together a benefit for the country. The provision of employment created due to MNCs reduces the unemployment rate. The tax earned by the government from these MNCs produce a large sum of money that can be invested by the government in the economic development of the country. Moreover, the direct flow of foreign currency into the country creates opportunities for massive subsidiary investment in the developing country.

 Consumer Buying Power is getting high:

The established MNCs provide high salary to their employee, which in turn raises the capacity of the consumers to buy more. Thus the buying power of the consumers in the developing nation increases along with the economy.

MNCs can bring benefits to consumers in developing countries, enabling them to buy better quality and better-value products such as mobile phones.

 Increase in BOT(Balance of trade)

Balance of trade is the trade difference between a country and the rest of the world. Which means it says that balance of trade is equal to the export of a country minus the imports of that country. MNCs can also contribute to improve the BOT of a country. It also helps increase export and decrease import. A good example can be the case of UniLever. The company can make a contract with the subsidiary in India called Hindustan Lever that they are going to import certain products to from UniLever Bangladesh limited. This can increase the export which is going to improve the BOT. At the same time BATB is using local tobacco leaves to make cigarette and which is reducing the import of foreign cigarette in the country as well. It is also helping to develop the balance of trade.

 PROVISION OF BETTER TECHNOLOGIES, FACILITIES AND OPPORTUNITIES:

Developing countries do not have the capability to introduce new technologies due to financial and skilled personnel lacking, such as, cellular technologies. This situation has been transformed by the MNCs, as their footsteps in the developing world have brought in frontier technologies along with the adequate facilities and opportunities.

Technology stimulates economic developments and industrialization. In less developed countries they lack R&D facility. So, advanced countries MNCs can step forward to help the developing countries to acquire knowledge about the new technology.

 Source of Earning Tax for Government:

MNC already running in a developing country needs to pay a certain amount of tax to the government. This amount of tax paid to the government generally is a large amount and it contributes to the tax more than any other local companies. Since, MNCs do not fail to regularly pay back the tax. This tax earned by the government from the MNCs provides a great way to achieving economic growth.

Mostly MNCs are successful in most of the developing countries. This means they earn a lot of money in that country. As a result the tax amount they pay is also huge. For instance Grameen Phone is a MNC which is paying the highest amount of tax to the government. So, we can see that it is a very good source for government earning which can help develop the country in the maximum possible manner.

 Utilization of unused resources

MNCs help use the vast amount of resources in the country which is mostly unused in most of the time. It would have been very hard for a country like Bangladesh to drill and use the natural gas available in the country. Some MNCs are helping the government in this sector to solve the problem. The enormous resources of the multinational enterprise enable them to have very efficient research and development system. Thus they make a contribution in the new invention in the country. MNCs also