Question

List and describe three disadvantages MNC’s (Multinational Corporations Article Reflection) have on Developing countries

Answer 1

Ans: Three disadvantages MNC's have on Developing countries are:

1. Raw Material and Skilled Labour: A large component of multinational investment in developing economies is taking out raw materials like:- oil, diamonds, rubber and precious metals,etc. The extraction of raw materials can cause environmental externalities – polluted rivers, loss of natural landscape. Also, there is only a short-term inflow of money to pay for the materials. The local market face the problem of shoratge of raw material as major part of material is extracted and used by the big MNC's. When undertaking new projects, the multinational may have to employ skilled labour from other economies and not the developing economy. This means best jobs are not received by local workers and the investment is diffused. This also means that the skilled workers of the developing countries have to sit idle as they are not given job oppurtunities.
2. Multinational Cooperation can cause harm to the environment: Developing countries do not have the same level of rules and regulations. When MNC's decide to do business in international market, they are responsible to follow the local laws not the ones that govern their domestic headquarters- when working to obtain raw materials.Multinational companies can outsource parts of the production process to developing economies with weaker environmental legislation. Some of the primary environmental issues causes by MNC's that are affecting businesses today include pollution, waste disposal, water quality, and water supply issues, and climate change. MNCs can create environmental imbalances extracting natural resources and polluting the environment of the Developing countries
3. Profit go back to the Multinational company instead of staying in the local market: Multinational Companies Provide job opportunities in every local market but they also channel out large amount of profit to their centralized office. Some may see this as a return on their infrastructure and educational investments, but it can also be a decision that further weakens an already underperforming government or economy. When you compare how much goes into foreign markets with what comes out of them, the difference is usually minimal and can sometimes be a negative return.