In the contemporary world, number of international companies are rising dramatically in developing nations. While the primary benefit of this phenomenon is better employment opportunities, increase in competition for local brands is a major drawback.
On the one hand, with the advent of globalisation the number of multinational companies are soaring, globally. The prime advantage of this new development is better job prospects for the citizens of growing countries. Generally, various under-developed and developing nations have plenty of skilled workers; however, many a times they struggle in finding relevant jobs. Nevertheless, increase in foreign direct investments provide significant roles to the citizens, and do mass hiring across the nations. Subsequently, causing increase in national income, standard of living, and growth of the nation. This certainly leads towards bright and successful future for the people residing in developing country. Make in India is a prime example, where Indian government attracted potential FDI’s in the year 2014 and onwards, as a result, unemployment rate declined and GDP increased drastically. Therefore, it is imperative to understand the profound role of MNCs in growing countries.
On the other hand, a rise in the number of international companies creates excessive competition for the local firms. A significant proportion of in-house corporations are in their infant stage, learning and building how to create productive market. However, an increase in competition causes insecurity and threats, due to which they lose potential customers and bear huge losses. The international organisations are already well established and producing in bulk with high goodwill, whereas the local products are struggling to meet the quality and price of foreign firms. Consequently, consumer prefers international products and this becomes the prime factor for shutting the local business. For instance, in 1991 after the implementation of liberal policies in India, numerous Indian industries collapsed, leading devastating repercussions on domestic industries. Hence, it is crucial to protect the domestic firms through policy and planning to foster holistic growth of local and international market.
To conclude, the surge in multinational companies in growing nations has created both positive and negative impacts. Although it creates more jobs in the employment market for young employees, it hampers the growth of local firms causing decline in domestic industries.