A multinational corporation is a large company that carries on its products and business activities in more than one country. It is also called a transnational corporation as its operations extend beyond the boundaries of the nation in which it was initiated. Example: multinational corporations working in India are Johnson and Johnson and Coca-Cola and Indian MNCs include Tata Steel and Reliance Industries.
Multinational corporations are spreading their production across countries in many ways. Large MNCs set up production units jointly with local companies in a country. Many times, Multinational corporations buy local companies and then start expanding their production activities. They provide advanced technology and managerial services to the enterprises established by them. Through these MNCs, technology has been transferred to developing countries. It has enabled them to produce quality goods and make them available in the international market. Thus, it paves the way to boost exports. Because of the flow of the MNC’s capital in foreign currency, the availability of foreign exchange increases. This in turn enables the country to make payments for imports. Thus, MNCs are playing an important role by spreading their production across countries.
MNCs set up or control production by investing large amounts of money in a country’s economy. They set up their production units close to the markets, where labor is available at a low cost. They work jointly with some local companies where infrastructural facilities are adequate and enhance production in developed cities. Hence, the backward areas remain backward and create regional disparities.
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