Contribution of/Positive roles (implications) Multinational corporation in economic development
- They create employment opportunities. Foreign investors set up production activities and business enterprises like banks, hotels, industries etc. which provide employment to the local population. This increases the incomes of the people hence better standards of living.
- They increase efficiency in resource allocation. Foreign investors employ efficient techniques of production which leads to the production of more goods and services hence economic growth and development. .
- They are a source of government revenue through taxation. Foreign investors help to widen the tax base in form of taxes imposed on their profits, employment incomes and other business activities created hence generating more tax revenue to the The revenue realized is used to construct social and economic infrastructure like hospitals, roads, schools etc.
- They increase capital inflow in the country. Foreign investors help to fill the savings-investment gap in developing countries through inflow of capital and other resources. This increases the level of investment in the country.
- They help to close the foreign exchange gap. Foreign investors bring in foreign exchange by investing in developing countries. This increases the country’s foreign exchange reserves and its monetary base. Such foreign exchange is used to import capital and consumer goods which cannot be produced locally.
- They lead to the development of social and economic infrastructure. Foreign investors promote the development of the social and economic infrastructures in form of roads, schools, hotels, hospitals, financial institutions etc. and this leads to the development of the economy.
- They promote technological development in the country. Foreign investors facilitate technological progress through technology transfer from developed to developing countries. Local people learn and adopt the modem techniques of production hence improving on their efficiency in production. This leads to the production of better quality goods and services.
- They promote the exploitation and utilization of the idle local resources. This helps to improve on the productive capacities in the economy hence economic growth and development.
- They reduce the balance of payment problems in the country. This is because foreign investors increase the production of goods and services for exports and for domestic consumption. This reduces on the importation of goods and services in the economy hence improved balance of payment position for the country.
- They promote industrial development. Foreign investors help to mobilize financial resources which are used for development of heavy industries like iron and steel industries, electrical engineering etc. Such industries require a lot of capital which is lacking in developing countries.
- They encourage competition in the local business activities. This leads to the production of better quality goods and services at reduced prices hence better standards of living.
- They accelerate economic growth of the country. This is because foreign investors widen the production and economic activities in the country which increases output in the economy.
- They lead to the production of a variety of quality consumer commodities. This widens the choice of consumers hence improving their standards of living through utility maximization.
- They help to create a class of entrepreneurs in the economy. The private foreign investors help to train the local individuals with the necessary managerial skills required .to operate modem business enterprises. This helps to close the manpower gap in developing countries.
- They promote good international relationships between their countries of origin and other countries where their business activities are extended. This enhances mutual understandings among countries.
- Fill the manpower gap
CATEGORIES Economics
TAGS Dr. Bbosa Science
