What is a forign MNCs:
A foreign MNC (Multinational Corporation) is a company that operates in multiple countries but is headquartered in a different nation from where it conducts business.
How MNCs Can Reduce the Deficit:
Boosting Exports – MNCs may produce goods locally for export, increasing foreign exchange earnings.
Reducing Imports – If MNCs manufacture goods domestically instead of importing, the trade deficit shrinks.
Creating Jobs & Incomes – Higher employment and wages can improve domestic consumption and economic growth.
How MNCs Can Worsen the Deficit:
Profit Repatriation – MNCs send profits back to their home countries, increasing the deficit in the income account.
Importing Raw Materials – If they rely on imported inputs, the import bill may rise.
Dominance Over Local Firms – If they outcompete domestic businesses, the long-term trade balance may not improve.
THE END
What are the economic benefits of foreign MNCs for host countries?
How do foreign MNCs impact local businesses and industries?
What challenges do foreign MNCs face when entering new markets?
How does the availability of skilled labor affect the growth of foreign MNCs?
What are the environmental and social implications of the expansion of foreign MNCs?
How do cultural differences influence the operations of foreign MNCs in host countries?
Rewrite the heading as Impact of an Increase in Foreign MNCs on the Current Account Deficit of a Host Country