Mncs and its involvement in international business
Answers
1.2 THE ROLE OF MULTINATIONAL CORPORATIONS IN MALAWI
They provide an inflow of capital into the developing country in form of Dollars and Material E.g. the investment to build the factory is counted as a capital flow on the financial account of the balance of payments. This capital investment helps the economy develop and increase its productive capacity for example the construction of the prominent Tobacco factories in an industrial site of Lilongwe city –Kanengo, Illovo sugar factories in Dwamgwa and Mchalo and many others. This level of investment is important for determining the level of economic growth. The inflows of capital help to finance a current account deficit. (Foreign investment enables developing countries to buy imports)This is easy in the sense that the subsidiaries in a host country are able to access foreign product at a reasonable prices out therefore they purchase through the mother company or corporation.
Multinational corporations provide employment to Malawians to work in these chain stores, sugar factories in Nchalo and Dwangwa in Chikwawa and Nkhotakota respectively, Tobacco factories and in many other corporations based in Malawi. Although wages seem very low to us, people in developing countries often see these new jobs as preferable to working as a subsistence farmer with even lower income. It is through this employment provision that both skilled and unskilled labour force is able to maintain reasonable level of living standards in most parts of Malawi. However Government alone cannot manage to absorb the labour force that is in Malawi as it struggles to meet their employment needs. The provision of employment chances to Malawians helps in the reduction of crime cases as most of the time crime and vandalism is associated with lack of economic activity to be done by the youth to support them. It is also through the employment provision that malnutrition levels get reduced at the house hold in such a way that through little income people get from working in the Multinational corporations ,Malawians are able to balance the nutritional levels of need at household level .
Multinational firms may help improve infrastructure development in the economy. These corporations have managed to build improved standard shops, roads to their premises, warehouses and other infrastructures in the effort to make the area conducive for the operations. In this way the overall National infrastructure is developed, through what the government is doing to their side and that of the Multinational companies. When these Multinational Corporation leaves the country the structures are either sold or surrendered to the Government for other developmental use in the case of multipurpose buildings. The old staff campus for motor Angel at Chinkhoma in Kasungu District at present is being used by the Auction Holdings Limited