Discuss the arguments for and against MNCS.
Ans. The arguments for and against MNCS are as follows: (1) Arguments for MNCS: The arguments for MNCS are as follows: (i) Filling Savings Gap: MNCS fill the resource gap between targeted or desired investment and domestically mobilised savings. (ii) Filling Trade Gap: MNCS fill the gap of foreign exchange or trade. An inflow of foreign capital can reduce or even remove the deficit in the balance of payments if the MNCS can generate a net positive flow of export earnings. (iii) Filling Revenue Gap: MNCS fill the gap between tar- geted governmental tax revenues and locally raised taxes. By taxing MNCS profits, LDC governments are able to mobilise public financial resources for development projects. (iv) Filling Management/Technological Gap: MNCS not only provide financial resources but they also supply a "package" of needed resources including management ex- perience, entrepreneurial abilities and technological skills. These can be transferred to their local counterparts by means of training programmes and the process of 'learn- ing by doing'. Moreover, MNCS bring with them the most sophisticated technological knowledge about production processes while transferring modern machinery and equipment to capital poor LDCS. Such transfers of knowledge, skills, and tech- nology are assumed to be both desirable and productive for the recipient country. (v) Some other benefits of MNCS: The MNCS also bring several other benefits to the host country that are as fol- lows: (a) Investments by MNCS will also induce more domestic investment. (b) The domestic labour may benefit in the form of higher real wages. (c) The consumers benefits by way of lower prices and better quality products. (d) MNCS development(R&D), although limited is bound to benefit the host country.
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