Multinational Corporations in Developing Countries

Readers Question: I have to debate why multinational corporations are good for developing countries, and I know the arguments for them being bad are strong so are there any really good positive arguments I could use to smash the opposition? Thankyou so much

Arguments for Multinational Corporations in developing countries.

• 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.