MNCs have contributed significantly to the development of world economy at large.

They have also served as an engine of growth in many host countries. Their importance in a developing country may be traced as follows: 1. MNCs help a developing host country by increasing investment, income and employment in its economy. 2. They contribute to the rapid process of development of the country through transfer of technology, finance and Tnodern management. 3. MNCs promote professionalisation management in the companies of the host countries. 4. MNCs help in promoting exports of the host country. 5. MNCs by producing certain required goods in the host country help in reducing its dependence on imports. 6. MNCs due to their wide network of productive activity equalise the cost of production in the global market. 7. Entry of MNCs in the host country makes its market more competitive and break the domestic monopolies. 8. MNCs accelerate the growth process in the host country through rapid industrialisation and allied activities. 9. The growth of MNCs creates a positive impact on the business environment in the host country. 10. MNCs are regarded as agents of modernisation and rapid growth. 11. MNCs are the vehicles for peace in the world. They help in developing cordial political relations among the countries of the world. 12. MNCs bring ideas and help in exchange of cultural values. 13. MNCs through their positive attitude and efforts work for the establishment of social welfare institutions and improvement of health facilities in the host countries. 14. Growth of MNCs help in improving the balance of payment status of the host country. 15. The MNCs integrate national and international markets. Their growth in these days has remarkably influenced economic, industrial, social environment and business conditions. In short, through basically seeking maximisation of profits by using all types of resources and strategies of the global economy, eventually globalisation has become the main focus of their

business. In this way, it has become a main propelling force behind the expansion of world economy at large. Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. According to ILO report "for some, the multinational companies are an invaluable dynamic force and instrument for wider distribution of capital, technology and employment; for others they are monsters which our present institutions, national or international, cannot adequately control, a law to themselves with no reasonable concept, the public interest or social policy can accept. MNC's directly and indirectly help both the home country and the host country. Advantages of MNC's for the host country MNC's help the host country in the following ways 1. The investment level, employment level, and income level of the host country increases due to the operation of MNC's. 2. The industries of host country get latest technology from foreign countries through MNC's. 3. The host country's business also gets management expertise from MNC's. 4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's. 5. MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness. 6. Domestic industries can make use of R and D outcomes of MNC's. 7. The host country can reduce imports and increase exports due to goods produced by MNC's in the host country. This helps to improve balance of payment. 8. Level of industrial and economic development increases due to the growth of MNC's in the host country. Advantages of MNC's for the home country MNC's home country has the following advantages. 1. MNC's create opportunities for marketing the products produced in the home country throughout the world. 2. They create employment opportunities to the people of home country both at home and abroad.

3. It gives a boost to the industrial activities of home country. 4. MNC's help to maintain favourable balance of payment of the home country in the long run. 5. Home country can also get the benefit of foreign culture brought by MNC's. Disadvantages of MNC's for the host country 1. MNC's may transfer technology which has become outdated in the home country. 2. As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries. 3. MNC's may kill the domestic industry by monpolising the host country's market. 4. In order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. 5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty. Disadvantages of MNC's for the home country 1. MNC's transfer the capital from the home country to various host countries causing unfavourable balance of payment. 2. MNC's may not create employment opportunities to the people of home country if it adopts geocentric approach. 3. As investments in foreign countries is more profitable, MNC's may neglect the home countries industrial and economic development. Applicability to particular business MNC's is suitable in the following cases. 1. Where the Government wants to avail of foreign technology and foreign capital e.g. Maruti Udyog Limited, Hind lever, Philips, HP, Honeywell etc. 2. Where it is desirable in the national interest to increase employment opportunities in the country e.g., Hindustan Lever. 3. Where foreign management expertise is needed e.g. Honeywell, Samsung, LG Electronics etc. 4. Where it is desirable to diversify activities into untapped and priority areas like core and infrastructure industries, e.g. ITC is more acceptable to Indians L&T etc.

5. Pharmaceutical industries e.g. Glaxo, Bayer etc. Advantages to home countries

Acquisition of raw material from abroad,which is cheaper in cost. Technology and management expertise accquired from competing in global markets. Export of components and finished goods for assembly or distribution in foreign markets. Inflow of income from overseas profits,royalities and management contracts. Jobs and career opportunities at home and abroad in connection with overseas opportunities.

Disadvantages include:

Trade restrictions imposed at the government-level Taxes or tariffs imposed on imports from other countries Limited quantities (quotas) of imports Effective management of a globally dispersed organization Slow down in the growth of employment in home countries. Destroy competition and acquire monopoly. Technology designed for mnc 's is for world wide profit maximization not for the social welfare or development of economy. They could cause fast depletion of some of the non renewable natural resources in the host country. In order to alley the fears of host countries they need to: o provide employment o train managers o provide products and services that raise the standard of living o introduce and develop new technical and managerial skills o increase productivity

Advantages Better employment opportunities Employment of new technologies Improvement in infrastructure

Availability of goods in variety

Disadvantages Exploitation of cheap labour in lieu of low wages Tough competition to indigenous industries government diverts funds to protect MNCs for foreign investment, accumulates infrastructural facilities to them The poor do not get the benefits from MNCs, it leads to environmental degradation, displacements issues.