Discuss The Effects That Multinational companies can have on a host Essay

Discuss The Effects That Multinational companies can have on a host acountry - Essay Example The many economic benefits to host countries have prompted many countries around the world, including developed and developing countries to focusing on attracting multinational companies or foreign direct investments as they are also called. Even countries that were otherwise hostile to these types of investments have been seeing them in a positive light. The targeting of these multinational companies has become an important development strategy as countries such as Ireland provide grants towards start up costs and research and development (Jensen 2006:38 ). One effect that multinational companies have on a host country is the economic and financial benefits that are gained by the host country. Especially in developing countries this is a welcome change for both the worker and the political directorate. High employment levels are a panacea for political and social stability. In many cases multinational companies pay higher wages than local companies. The high demand for workers also contributes to the higher wages. The workers also receive training in technology, management, and entrepreneurial expertise that can be transferred to other facilities and areas in the country. Some employees also receive training in the parent company overseas. Consequently, the host now will now have a more highly skilled workforce that will be better able to compete with other countries. The host country will also receive economic gain through revenues paid to the government. Generally the companies are subjected to the different tax guidelines of the countries. In many cases the bargaining power of the host country helps these countries in securing major financial benefits. These tax incentives will increase economic growth and progress and will also help in stabilizing local currencies. The host country will also benefit from improved and new infrastructure. These developments help not only as an immediate benefit but in the long run as well.