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    Multinational corporations operate in multiple countries and have centralized offices in one home country. They bring capital, new technology, skills, and goods to other countries, but may seek to maximize only the parent company's profits. While MNCs can increase incomes and efficiency, they may also limit technology sharing, force subsidiaries to buy from the parent company, and manipulate transfer prices to avoid taxes. However, MNCs also provide standardized goods and services that consumers find reliable. They can increase specialization and take advantage of economies of scale, but may pollute if not properly regulated and offer only low wages by some standards. Some MNCs have worked to improve labor conditions in response to criticism.

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    _ACTIVITY 15 AECCO2

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    Multinational corporations operate in multiple countries and have centralized offices in one home country. They bring capital, new technology, skills, and goods to other countries, but may seek to maximize only the parent company's profits. While MNCs can increase incomes and efficiency, they may also limit technology sharing, force subsidiaries to buy from the parent company, and manipulate transfer prices to avoid taxes. However, MNCs also provide standardized goods and services that consumers find reliable. They can increase specialization and take advantage of economies of scale, but may pollute if not properly regulated and offer only low wages by some standards. Some MNCs have worked to improve labor conditions in response to criticism.

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    8 views2 pages

    Singson, Anna Marie Aecco2 Bsa 2B

    Uploaded by

    Anna Marie Singson
    Multinational corporations operate in multiple countries and have centralized offices in one home country. They bring capital, new technology, skills, and goods to other countries, but may seek to maximize only the parent company's profits. While MNCs can increase incomes and efficiency, they may also limit technology sharing, force subsidiaries to buy from the parent company, and manipulate transfer prices to avoid taxes. However, MNCs also provide standardized goods and services that consumers find reliable. They can increase specialization and take advantage of economies of scale, but may pollute if not properly regulated and offer only low wages by some standards. Some MNCs have worked to improve labor conditions in response to criticism.

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    SINGSON, ANNA MARIE AECCO2

    BSA 2B

    MODULE 15: BALANCE OF PAYMENTS, AID, AND FOREIGN INVESTMENT


    ACTIVITY 15
    The benefits and costs of multinational corporations in the development of a country
    Multinational corporations are multinational businesses that operate in multiple
    countries throughout the world. It operates all of its other offices, such as administrative
    branches and industries, from a centralized office in one country. To be sure, MNCs bring in
    capital, new technology, management skills, new goods, and enhanced efficiency and income;
    yet, MNCs often seek to maximize the parent company's profits, not the subsidiaries'. However,
    it may be in the parent company's best interests to limit the transfer of technology and industrial
    secrets to the subsidiary's local employees, to limit the subsidiary's exports, to force it to buy
    intermediate parts and capital goods from the parent, and to set intra-firm (but international)
    transfer prices to avoid paying taxes in the host country.
    The advantages and disadvantages of multinational firms in a country's development.
    Ensure that basic criteria are met. Consumers like to acquire goods and services where they can
    rely on minimal standards, which contributes to multinationals' success. For example, if you go
    to any country, you can be sure that the Starbucks coffee shop will provide you something you
    are acquainted with. It won't be the best coffee in town, but it won't be the worst either. The
    comfort of knowing what to expect is appealing to many people. Increase national income by
    increasing specialization and taking advantage of economies of scale. Remove barriers to free
    trade and factor movement to increase efficiency.
    Other concerns may be at the root of some MNC critiques. The fact that MNCs
    pollute, for example, may be a result of government regulation failure. Small businesses can also
    pollute just as much. MNCs may offer low wages by Western standards, but they are
    unquestionably better than having no work at all. In addition, some international corporations
    have worked to improve labor conditions in response to public outcry.
    Reference:
    Pettinger, Tejvan, and National Debt Line. “Multinational Corporations: Good or Bad?”
    Economics Help, 27 Nov. 2019,
    https://www.economicshelp.org/blog/538/economics/multinational-corporations-good-or-
    bad/.
    “Multinational Corporation (MNC).” Corporate Finance Institute, 29 Sept. 2020,
    https://corporatefinanceinstitute.com/resources/knowledge/strategy/multinational-
    corporation/.

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