Economics

1. Availablity of capital and foreign investment :
MNC help to solve the problem of capital and foreign investment by under developed and developing countries. MNCs set up factories, and offices for production in these developing and underdevloping countries and make huge investment. The money that is spent to buy assets is called investment. Investment made by these MNCs is called foreign investment.
2. Availability of foreign exchange :
MNCs can be helpful in solving the problem of foreign exchange of the underdeveloped and developing countries. In 1905 India faced a huge shortage of foreign exchange but with the entry of MNCs it has surplus foreign exchange reserves.
3. Promotion of small scale industries :
Most of the MNCs take help from small scale and local industries in manufacturing. Manufacture of garment, footwear, sports items etc carried out by a large number of small producers around the world. The products are supplied to the MNCs which then sell these under their own brand names to the customers.
4. Foreign Trade and Integration of Market :
With the entry of MNCs even the small countries have depended on their domestic markets.
 It increases foreign trade.
 It creates an opportunity for the local producers to reach beyond the domestic market.
 Producers can sell their products not only in local market but also in foreign market.
 Buyers and consumers are getting variety of goods of their choice.
 Prices of most of the consumer goods have fallen down due to the competition.
Availability of modern techniques and management :
Modern technology and managerial services are made available to the local companies. As a result the productivity of the local enterprises increases and resources are optimally utilised.