Multinational Corporations In India Ppt
MULTINATIONAL CORPORATIONS
IN INDIA
MEANING
• Multinational corporations (MNCs) are huge industrial organizations having a wide network of branches and subsidiaries spread over a number of countries. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies.
POSITIVE ROLE OF MNCs
• The frst important contribution of MNCs is its role in flling the resource gap between targeted or desired investment and domestically mobilized savings • An inflow of foreign capital can reduce or even remove the defcit in the balance of payments if the MNCs can generate a net positive flow of export earnings.. • The third important role of MNCs is flling the gap between targeted governmental tax revenues and locally raised taxes.
• Fourthly, Multinationals not only provide fnancial resources but they also supply a “package” of needed resources including management experience, entrepreneurial abilities, and technological skills.
• Moreover, MNCs bring with them the most sophisticated technological knowledge about production processes while transferring modern machinery and equipment to capital poor LDCs.
POSITIVE ROLE OF MNCs(contd)
• .Other Beneficial Roles: The MNCs also bring several other benefts to the host country.
• (a) The domestic labour may beneft in the form of higher real wages. • (b) The consumers benefts by way of lower prices and better quality products.
• (c) Investments by MNCs will also induce more domestic investment. For example, ancillary units can be set up to
‘feed’ the main industries of the MNCs
• (d) MNCs expenditures on research and development(R&D), although limited is bound to beneft the host country.
NEGATIVE ROLE OF MNCs
1 Although MNCs provide capital, they may lower domestic savings and investment rates by
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3
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5
stifling competition through exclusive production agreements with the host governments.
MNCs often fail to reinvest much
IN INDIA
MEANING
• Multinational corporations (MNCs) are huge industrial organizations having a wide network of branches and subsidiaries spread over a number of countries. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies.
POSITIVE ROLE OF MNCs
• The frst important contribution of MNCs is its role in flling the resource gap between targeted or desired investment and domestically mobilized savings • An inflow of foreign capital can reduce or even remove the defcit in the balance of payments if the MNCs can generate a net positive flow of export earnings.. • The third important role of MNCs is flling the gap between targeted governmental tax revenues and locally raised taxes.
• Fourthly, Multinationals not only provide fnancial resources but they also supply a “package” of needed resources including management experience, entrepreneurial abilities, and technological skills.
• Moreover, MNCs bring with them the most sophisticated technological knowledge about production processes while transferring modern machinery and equipment to capital poor LDCs.
POSITIVE ROLE OF MNCs(contd)
• .Other Beneficial Roles: The MNCs also bring several other benefts to the host country.
• (a) The domestic labour may beneft in the form of higher real wages. • (b) The consumers benefts by way of lower prices and better quality products.
• (c) Investments by MNCs will also induce more domestic investment. For example, ancillary units can be set up to
‘feed’ the main industries of the MNCs
• (d) MNCs expenditures on research and development(R&D), although limited is bound to beneft the host country.
NEGATIVE ROLE OF MNCs
1 Although MNCs provide capital, they may lower domestic savings and investment rates by
2
3
4
5
stifling competition through exclusive production agreements with the host governments.
MNCs often fail to reinvest much