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Class 10 > Learn Class IX-X Tuition > What are the reasons by which MNCs are set up in developing...
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What are the reasons by which MNCs are set up in developing countries?

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Developing countries are becoming a hub of MNCs because of the reason that these countries are most eager and are underway to develop and want to be on par with the developed countries. Thus these countries ease up their norms and regulations and try to attract these foreign companies to open up their...
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Developing countries are becoming a hub of MNCs because of the reason that these countries are most eager and are underway to develop and want to be on par with the developed countries. Thus these countries ease up their norms and regulations and try to attract these foreign companies to open up their business units in these developing nations. Thus, the profit and ease of doing business in these countries makes them a preferred location for MNCs. They Provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity. The Harod Domar model of growth suggests that this level of investment is important for determining the level of economic growth.The inflows of capital help to finance a current account deficit. (foreign investment enables developing countries to buy imports).Multinational corporations provide employment. Although wages seem very low to us, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income. Multinational firms may help improve infrastructure in the economy. They may improve the skills of their workforce. Foreign investment may stimulate spending in infrastructure such as roads and transport. Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply.
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English Language Trainer and Meditation instructor

the main reasons for the MNC's to setup in developing countries are They Provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop...
read more
the main reasons for the MNC's to setup in developing countries are They Provide an inflow of capital into the developing country. E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity. The Harod Domar model of growth suggests that this level of investment is important for determining the level of economic growth.The inflows of capital help to finance a current account deficit. (foreign investment enables developing countries to buy imports).Multinational corporations provide employment. Although wages seem very low to us, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income. Multinational firms may help improve infrastructure in the economy. They may improve the skills of their workforce. Foreign investment may stimulate spending in infrastructure such as roads and transport. Multinational firms help to diversify the economy away from relying on primary products and agriculture – which are often subject to volatile prices and supply. read less
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Kapoor sir

To get maximum profit to get favourable policies to cause pollution as they r nt allowed to cause it in their home nation
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Math & Science

becouse there they are having more opportunity for businees (grasping the more customer) as well as there they care getting more fascility in terms of raw materials low labour cost etc.....
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Developing countries are becoming a hub of MNCs because of the reason that these countries are most eager and are underway to develop and want to be on par with the developed countries. Thus these countries ease up their norms and regulations and try to attract these foreign companies to open up their...
read more
Developing countries are becoming a hub of MNCs because of the reason that these countries are most eager and are underway to develop and want to be on par with the developed countries. Thus these countries ease up their norms and regulations and try to attract these foreign companies to open up their business units in these developing nations. Thus, the profit and ease of doing business in these countries makes them a preferred location for MNCs. read less
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TEACHER WITH 13 YEAR,S EXP. IN EDUCATION FIELD

Looking for domestic markets to sell more goods, seeking raw materials and managerial knowledge or technology and trying to find countries where factors of production are cheaper are the main motivations behind global expansion of companies.The motivation of MNCs for investing in these countries differs...
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Looking for domestic markets to sell more goods, seeking raw materials and managerial knowledge or technology and trying to find countries where factors of production are cheaper are the main motivations behind global expansion of companies.The motivation of MNCs for investing in these countries differs from that for investing in developed countries, since the return of investment is higher with its risk premium. read less
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It is aspiration to grow which will be high in developing countries. People want to prove there credentials and thus they get good intelligent work force and the competition between themselves comes to an advantage of the MNC setting up their shops in developing countries. In addition there will...
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It is aspiration to grow which will be high in developing countries. People want to prove there credentials and thus they get good intelligent work force and the competition between themselves comes to an advantage of the MNC setting up their shops in developing countries. In addition there will be government support to ensure these MNC generate employment. read less
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Math & Science Tutor

As we know MNCs ( Multi National Companies) have latest & advance technology. They are already doing good business in some developed countries. In most of developing countries latest & advance technology is not available. MNCs can provide services using these technology and earn profit. For example...
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As we know MNCs ( Multi National Companies) have latest & advance technology. They are already doing good business in some developed countries. In most of developing countries latest & advance technology is not available. MNCs can provide services using these technology and earn profit. For example Honda Motors & Suzuki Motors have set up Automobile business in India. Vodaphone Mobile has setup Telecom business in India. read less
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Communication Engineering Expert

MNC set up in developing countries have a positive effect on host countries because they provide direct employment to local people and transfer of skills through education and experience. They also affect the indirect employment through paying rent for land and buildings and cooperating with local su...
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Geek

1. The main reason is affordable labor. 2. Further more developing countries have policies which attracts such MNC's. 3. China is world factory reason being affordable labor and export imports costs less. 4. Overall cost on production and maintaining the office and factories is comparatively less. 5....
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1. The main reason is affordable labor. 2. Further more developing countries have policies which attracts such MNC's. 3. China is world factory reason being affordable labor and export imports costs less. 4. Overall cost on production and maintaining the office and factories is comparatively less. 5. Under Make In India campaign the main attraction is ease of doing business for eg - The company incorporated in India is required to pay 30% tax+surcharge+education cess on net income earned. It is also required to deduct tax on profits distributed @15.5%+surcharge+education cess. I hope that answers the ques. read less
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