Globalization and the Indian Economy

• What is an MNC?

  MNC stands for multinational corporations. A MNC is a company that owns or controls production in more than one nation.
• Production was largely organised within countries until mid-20th century.
• What are the various ways in which MNCs set up control or production in other countries.?

  • MNC setup offices and factories for production in regions where they can get cheap labor and other resources. This reduces the cost of production and increases profits.
  • MNCs not only sell their products globally Their goods and services are produced globally.
  • Their production processe is divided into small parts and spread out across the globe.nsnwhwhjw
• China provides the advantage of being a cheap manufacturing location.
• Mexico and Eastern Europe are useful for their closeness to the markets in US and Europe.
• India has skilled engineers and educated english-speaking youth who can provide customer care.
• While setting up production, MNCs look for:

  • skilled and unskilled labour available at low cost
  • availability of other factors of production
  • government policies that suit their interests
• What is foreign investment?


  Investment made by MNCs for buying assets and other equipment is called Foreign investment.
• How do local companies benefit from MNCs?

  At times, MNCs may set up production jointly with local companies.

  • MNCs can provide money for additional investments like buying new machines for faster production.
  • MNCs might bring with them the latest technology for production.