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Published bySheryl Kathryn Franklin Modified over 9 years ago
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Multi-national companies: Good or Bad
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Benefits of MNCs and FDI Increase local employment: backwards linkages Increase/supplement Investment (possibly due to lack of savings/capital flight) Greater tax revenue
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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
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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
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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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