role of multinationals in developing and developed countries

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Econ 334

Introduction

Multinational corporations are organizations that operate in multiple nations. However this is no longer the only description for 21st Century MNC’s. These are firms that practice corporate ownership beyond national borders. Through managing and production of goods, services and the proper allocation of resources in more than one country. There are various ways to describe an MNC (multi-national-corporation), they differentiate in the types of operations they conduct. Most MNC’s are run from the head office in one country, with their facilities running in other countries. A perfect example of this would be Asian Paints; it is amongst the top 10 decorative paints in the world. They have facilities in over 24 countries to ensure services locally giving them lower cost of production. Another type of operations running is with the Parent company running in one country whilst having subsidiaries running globally. An example of this type of MNC would be Coca Cola, with its head quarters in the US and subsidiaries such as Coca Cola India etc spread globally. Other variations come with different types of managerial control within the MNC’s. A complex version of an MNC would be Ranbaxy, ‘The firm exports to over 70 countries, directly manages operations in 34 and manufactures in seven.’

This type of MNC’s basically exists to efficiently produce at locations with lower cost of production and optimum use of resources. By opening facilities at different locations, they have opened doors to multiple resources that now is a part of their global organization. The MNC’s contribute to the social and economic welfare of the host country by bringing in new capital, latest technology and generating new employment. In developing countries MNC’s find the lowest cost of production but to operate they have to create facilities that will improve the social conditions. Example. Initially when MNC’s entered Africa they had to build railway lines for...
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