The Role of Multinational Enterprises

Most of the Multinational Enterprises (MNEs) are operating in different countries especially in developing countries where they can get cheap labour forces and also get benefited from tax arrangements or tax benefits and get production supports from those countries. But, their main marketing operations are held in parent countries.

Even, MNEs get better transnationality index from doing operation in different developing countries and also make a huge involvement in developing countries' employment. Vodaphone Group plc is one of the best examples of that which has better GNP than many developing countries. On the other side, regionalism responses are being considered as economic benefits for the many nationalities, free trade and other operation facilities are involved there. Examples of successful regionalism and international trade are EU, NAFTA, ASEAN, etc. Moreover, international trade increases the output of the whole world.

But, MNEs act sometimes as villains for the global economy. Many domestic firms and their activities close down when MNEs are successful over developing countries. Day by day foreign direct investment (FDI) is increasing by developed countries and they are more benefited than developing countries, especially Asian countries. As a result, GDP growth is more in developed countries compared to developing countries. Increasing number of mergers and acquisitions and more FDI in technological sector are really benefiting advanced countries compared to developing countries. In most cases, MNEs are more productive than subsidiary national firms due to more R&D and skilled personnel.

Finally, MNEs are more efficient than national firms. So, they are more efficient in world production, which helps to make higher aggregate income for the world. Sometimes, foreign operations of MNEs are carried out in looser ways to help national market. Though MNEs are sometimes very strong competitors for developing countries, but still have a huge contribution to integrated world economy.

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