Benefits of MNCs
Multinational corporations (MNCs) are firms that export their goods to other countries and they also have established production and marketing operations in other countries apart from their home base. Good examples of MNCs include car manufacturers like Toyota, Ford and Honda, oil companies like BP and Shell, technology companies like Microsoft and Dell as well as food and beverage companies like McDonalds and Coca Cola.
1. Creates employment opportunities
The main of multinational corporations is to bring investments to other countries aside from their home base. This investment provides a boost to both the local economy as well as the national economy. For example, building a new factory requires certain resources like land, capital and labor. The local people will therefore provide the manpower required for building the new factory. As a result, MNCs assist to reduce under-employment in a certain country through creating new job opportunities in their factories.
2. New skills and ideas
The other key advantage of MNCs is that they usually bring about new techniques as well as new ideas that can assist in improving the overall quality of production. Most of the MNCs do more than employ the local labor; they also provide them new skills through training in order to improve efficiency and productivity. This can lead to an increase in the standard of human capital present in the host nation.
3. Easier access to raw materials
In certain cases, production in the host countries mainly targets the export market since the raw materials can be easily found. Through investing in another country, a multinational corporation can also be able to by-pass trade barriers. This is highly beneficial as it will likely lead to the production of high quality products at low cost prices.
However, employment may not be as widespread as hoped since most jobs might require skilled workers from another country rather than the domestic workers.