Describe the role of Multinational Corporations (MNCs) in promoting globalisation process.
Explain the role of multinational corporations in the globalisation process.
MNCs play an important role in globalisation process as they invest in other countries. This investment can be done in three ways.
1) MNC establishes itself on its own in the new country by buying land, constructing its factory and buying machines etc.
2) MNCs set up production by entering into joint ventures with some of the local companies of that country.
3) MNCs buy a local company having considerable market share in that country. This enables an MNC to expand production on an already-created base.
MNCs are playing a major role in the globalisaion process as they:
Increase the foreigh trade
Increase the foreign investment
Exchange of technology between countries.
Better means of communication have developed alongside globalisation
Better job opportunities for people
The role of MNCs in the process of globalisation can be understood through the following five examples:
1. MNCs have led to the availability of products from all over the world in any country. For example, in India, corporations like Ford and Hyundai have led to a greater availability of cars from other countries.
2. MNCs from developing countries are also increasing their presence in developed countries. For example, Tata Tea purchased Tetley, a tea brand in Britain a few years ago.
3. They have led to a greater movement of labour across the world. For example, Indian software engineers working in TCS go the U.S. for work.
4. MNCs have increased the inflow of foreign capital across different countries. For example, when a corporation like General Electric invests in India, it brings in capital from abroad.
5. They have led to more transfer of technology across the countries. For example, Samsung brings in more advanced technology for manufacturing electronics into countries like India.