The following are the benefits/merits of MNCs:

1. Economic Development: -The Developing countries need both Ioreign capital and technology
to make use oI available resources Ior economic and industrial growth. MNCs can provide the
required Iinancial, technical and other resources to needy countries in exchange Ior economic
gains.

2. Technology Gap: - MNCs are the instruments oI transIer oI technology to the host country.
Technology is necessary to bring down cost oI production and produce quality goods on a large
scale. The services oI MNCs can be oI great help to bridge the technological gab between
developed and developing countries.

3. Industrial Growth: - MNCs are dynamic and oIIer growth opportunities Ior domestic
industries. MNCs assist local producers to enter the global markets through their well established
international network oI production and marketing. And there by ensure industrial growth.

4. Marketing Opportunities: - MNCs have access to many markets in diIIerent countries. They
have the necessary skills and expertise to market products at international level. For example, an
Indian Company can enter into Joint Venture with a Ioreign company to sell its product in the
international market.

5. Work Culture: - MNCs introduces a work culture oI excellence, proIessionalism and Iairness
in deals. The sole objective oI Multinational is proIit Maximation. To achieve this, the
Multinationals use various strategies like product innovation, technology up gradation,
proIessional management etc.

6. Export Promotion: - MNCs assist developing countries in earnings Ioreign exchange. This can
be done by promoting and developing export oriented and import substitute industries.

7. Research and Development: -The resources and experience oI MNCs in the Iield oI research
enables the host country to establish eIIicient research and development system. It is a Iact that
many MNCs are now shiIting their research units to countries like India to avail oI monetary
incentives and cheap labour.

The following are the De-merits MNCs

1. Problem of Technology: - Technology developed by MNCs Irom developed countries does not
Iully Iit in the needs oI developing countries. This is because, such technology is mostly capital
intensive.
2. Political Interference: -The MNCs Irom developed countries are criticised Ior their
interIerence in the political aIIairs oI developing nations. Through their Iinancial and other
resources, they inIluence the decision-making process oI the governments oI developing nations.

3. Self-Interest: -MNCs work towards their own selI-interest rather than working Ior the
development oI host country. They are more interested in making proIits at any cost.

4. Outflow of foreign Exchange: -The working oI MNC is a burden on the limited resources oI
developing countries. They charge high price in the Iorm oI commission and royalty paid by
local subsidiary to its parent company. This leads to outIlow oI Ioreign exchange.

5. Exploitation: - MNCs are criticised Ior exploiting the consumers and companies in the host
country. MNCs are Iinancially very strong and adopt aggressive marketing strategies to sell their
products, adopt all means to eliminate competition and create monopoly in the market.

6. Investment: -MNCs preIer to invest in areas oI low risk and high proIitability. Issues like social
welIare, national priority do not Iind any place on the agenda oI MNCs.

7. Artificial Demand: -MNCs are criticised on the ground that they create artiIicial and
unwarranted demand by making extensive use oI the advertising and sales promotion techniques.