Multi-national companies: Good or Bad. Benefits of MNCs and FDI Increase local employment: backwards linkages Increase/supplement Investment (possibly.

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Presentation transcript:

Multi-national companies: Good or Bad

Benefits of MNCs and FDI Increase local employment: backwards linkages Increase/supplement Investment (possibly due to lack of savings/capital flight) Greater tax revenue

Benefits of MNCs and FDI cont Supplement foreign earnings (balance of payments issues) Improve local technology Improve human capital (managerial, technical skills) Promote local industries

Drawbacks of MNCs and FDI Repatriation of profits Bring in foreign talent (your teacher, your parents possibly) Tax revenue may be low (tax incentives, transfer pricing) Race to the bottom: Countries may compete to attract MNCs which hinders development  -weak environmental policies, weal labor law, lower regulations, lax tax structure Push for market export oriented growth

drawbacks of MNCs cont. May promote inappropriate consumption behaviors:  Fast food, baby formula(Nestles) May divert government resources from poverty-reducing infrastructure to business- oriented infrastructure May undercut local (infant/sunrise) industries Environmental degradation corruption

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