Economics(Paper-4) - Shivaji University

D) It makes to recipient country to avail the discovery and introduction of new process,
new technique and variety of products to raise the standard of living of the masses
living in these countries.
IV) Dis advantages / Demerits of MNC’s :
Though the MNC are proved to be a powerful instrument of rapid economic growth
of recipient countries but they have been criticized widely on several grounds which
are –
1) Harmful for producers and consumers :
MNC’s are oligopolists in nature and have loyalties to none, So they have power to
eliminate any actual and potential competition. They manipulate future markets,
differentiate their products through deceptive advertisement. This makes bad impact
and effect on the part of producer as well as consumer.
2) Bad Business ethics :
MNC’s follow bad business ethics such as bribes to officials to get work done.
They also interfere in political affairs of the host countries to make favorable legal system
for their own benefits. These are the serious aspects of the working of MNCs.
3) Exit of transfer-pricing :
This referes to intra-company transactions related to deceptive prices with view to
maximize group profits. For example. MNC’s sells dear to its affiliate with low tax country
A. and buyes cheap from affiliated with high tax in ‘B’. This increase the profit of country
‘A’ and loss to country ‘B’. Hence, as a result of this it make huge profit which is retained
in their own country.
4) Currency Manipulations :
The MNC’s involve in financial dealings in several national currencies. They keep
on accumulating funds in places that are safe with strong currencies and high interest
rates. In case of weak-currencies MNC’s ask their affiliates to go in for larger debts
through raising fresh loans, premature repayments of old loans etc. In short they built
up assets in strong currencies, and debt in weak currencies. This impact no advantage
to the less developed countries and further harm them directly to weaking currencies
and indirectly add up currency crises at the world level.
4.2.4 Globalization and Economic Development :
1) Introduction :
Much discussion has been taking place in the world about globalization and its
impact on economic development for both developing and developed countries. The
seriousness was croppled after world trade organization (WTO) inception in 1995. It
has started its involvement in expansion of economic activities across political
123456789012345678901234567890121234567
123456789012345678901234567890121234567
56
123456789012345678901234567890121234567
123456789012345678901234567890121234567
123456789012345678901234567890121234567
123456789012345678901234567890121234567
123456789012345678901234567890121234567
123456789012345678901234567890121234567