MNCs

Multinational corporations (MNCs) are corporate groups that own or control production or service activities in two or more countries. Typically, they have a parent company in a home country and subsidiaries, affiliates, or branches abroad in host countries. MNCs coordinate global operations through transnational networks, often spanning manufacturing, marketing, research and development, and distribution. Their activities are financed by capital markets, reinvested earnings, and internal funding within the corporate group. The scale and complexity of MNCs vary, from large diversified conglomerates to specialized firms with global supply chains.

Origin and growth: The modern MNC emerged with the expansion of international trade and investment in the 20th century, aided by improvements in transportation, communications, and liberalization of investment regimes. They expand through foreign direct investment, cross-border mergers and acquisitions, and joint ventures, seeking access to markets, resources, and labor.

Economic role: MNCs contribute to capital formation and technology transfer and can raise productivity through scale economies and global sourcing. They influence host-country economies via employment, tax payments, supplier networks, and potential knowledge spillovers. Critics argue that their market power, tax practices, and influence on public policy can distort competition and development, especially in developing countries.

Regulation and governance: MNCs are governed by the laws of multiple jurisdictions. Tax and competition rules, transfer pricing regulations, and repatriation policies shape their behavior. International guidelines and institutions provide norms, but enforcement is uneven across countries.

Trends and issues: The share of intangible assets and services in MNC value chains has grown, changing corporate governance and measurement. Supply-chain resilience and geopolitical tensions influence investment decisions. Regulatory scrutiny over taxation, data privacy, labor practices, and environmental impact remains prominent.