Open Economy – Role of MNCs in India
                     OPEN ECONOMY – 
ROLE OF MNCS IN 
INDIA
INTRODUCTI
ON
An open economy is a type of economy where not only 
domestic factors but also entities in other countries engage 
in trade of products. Trade can take the form of managerial 
exchange, technology transfers, and all kinds of goods and 
services.
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ROLE OF 
Governments have many respoMnsibilitieNs suchC as alSleviating 
poverty, providing social security and to develop the nation 
financially etc. But with limited funds, it has to prioritise the 
things to do. 
In the process, it is very difficult for governments of 
developing countries to invest in economic development. 
MNCs help governments in this case and bring a lot of 
foreign investment which paves the way for the economic 
development of the country.
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EMPLOYMEN
T 
OPPORTUNITI
Unemployment is one of the serious problems of India. MNCs 
provide employment opportunities and helps in solving the 
unemployment issue to some extent. As thEe wages will in turn be spent on buying goods and services in InSdia, it ’ll be 
helpful for the Indian economy.
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KNOWLEDGE 
TRANSFER
MNCs are also helpful in knowledge transfer. As MNCs 
operate in more than one country, they practically test and 
implement the best strategies. This technological and 
knowledge transfer helps the host countries.
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COMPETITIO
N TO 
DOMESTIC 
As MNCs gOive touMgh comPpetitAion toN domeIstiEc comSpanies, 
people will get better quality products at lower prices.
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ADVANTAGE 
FOR OTHER 
COUNTRIES
As many MNCs reinvest their profits in the host countries in 
general, it will be a plus to the host countries’ economy.
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BETTER 
ACCESS TO 
FOREIGN 
MNCs have better access to foreign markets. Some MNCs in 
India are tappiMng expAort mRarketKs andE areT helpSful in 
improving the overall exports of India and thereby help in 
reducing trade deficits.
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MAINTAINING 
RELATIONS 
MNCs helps host countries in maintaining better relations 
not just with their home countries, but also with the 
countries that they have trade relations.
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IMPROVING 
THE STATUS 
Indian MNCs are improving the status of India in the 
international community.
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CONCLUSION
In the modern world, globalisation is inevitable. Though 
there were so many fears when India allowed MNCs into the 
country, they have been playing an important role in India’s 
economic development. But not all MNCs are helpful for the 
host country. 
Some companies establish their businesses in other 
countries with the only motive of capturing the domestic 
market. Governments should be cautious in allowing this 
type of companies.
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