Award [1] for stating one possible disadvantage without any outline.
Award [2] for stating one possible disadvantage with a brief outline.
Disadvantages may include:
- Repatriation of profits and royalties may lead to balance of payments problems.
- Importation of intermediate goods and capital goods may lead to balance of payments problems.
- Domestic firms may be hurt as they may be small and not able to compete.
- Technology employed may be inappropriate so that employment decreases.
- Income inequality may widen between rural and urban areas where most MNCs locate.
- The tax contributions may be less than expected because of tax concessions and/or transfer pricing.
- MNCs may use their economic power to adversely influence markets/government policies.
- Production by MNCs may result in negative externalities/exploitation of resources.
Any other valid disadvantage outlined.
