Page 6 - Home Assignment 14

5. Improving balance of trade.

Developing countries suffer from the adverse balance of trade because

they import more goods than export. The imports from these countries

are not acceptable due to high prices and low quality of products. Since

multinationals bring same technology of production which is used by

developed countries, so, the products become competitive in

international markets.

Disadvantages.

1. Harmful for producers.

The entry of multinationals is harmful to producers of host countries. These

corporations are in a position to sell goods at cheaper rates. The small units

are eliminated because they cannot withstand the competitors too.

2. Political Dominance.

Multinationals concentrate economic power in their hands. Through this

power they try do dominate the political decisions of host countries. The

countries which are dependent for economic help on big countries cannot

take political decisions without the wishes of their masters.

3. Creating Monopoly.