Question

Provide and explain 3 ways how multinational corporations can lead to economic growth.

Answer 1

Multinational corporations can provide growth to developing countries by infusing large amount of capital in a country and increasing employment in a huge scale.They setup large offices and factories where investment is very high and production of goods and services is very efficient, so they require skill labourers and pay high wages, which increases wage levels in a country and in the process also increasing consumer spending.

They are a major source of transfer of technology from one country to another.They use advanced technological factor inputs, which the country might have not seen before, for their mass production, thus paving path for technological advancement of that country.

They infuse large amount of foreign capital in a country which largely improves the country's balance of payments.They also significantly increase an economy's GDP due to their large scale production and high amount of exports.