Question

indicate whether you agree or disagree with the following statement and explain why. “Multinational investments take place whenever a firm finds it cheaper to do one stage of its production in a foreign country"

Answer 1

I disagree with the above statement, the above statement in itself is an incomplete statement, the main reason behind the multinational investment is not just only the cheaper production in the foreign country, it is an inclusive and a wide idea, multinational investments aims to benefit from tariffs, trade concessions, cheap labour, capital subsidies and reduced logistics cost. They also aim to create expertise centres, skilled workforce and establishing customer supplier relationships. For eg:- Intel has corporate and software parks in many asian countries like India, China, South Korea etc, there aim is not just production of goods but they also focus on product engineering and after sales servicing.