Dis and Advantages of Home Country

In: Business and Management

Submitted By nttd123456
Words 260
Pages 2
Home country
Loss of Employment: Companies which invest abroad in production and marketing facilities hire labor of the foreign country, in this case, it leads to a loss of employment in the home country. Many -a-times it is seen that MNC even close plants in their home countries and move these production facilities to third world countries in order to benefit from cheaper labor and material sourcing costs.
Problem of Repatriation: Many countries especially those countries which have scarce foreign exchange reserves tend to restrict the outflows of profits, dividends and royalties of the MNCs in order to save their foreign exchange for other more important purposes. In such cases, the profits or gains made in the foreign country remain there and cannot be deployed elsewhere in the event that there are more profitable opportunities available.
Possibility of Loosing Competitive Advantage: This problem is especially true for technologically advanced developed countries. Development of new technology is a costly affair along with it requiring a significant investment of time and effort. Many-a-times, these technologically advanced developed countries have to license these technologies to the developing countries as a part of their FDI strategy, this gives these countries access to vital information on these technologies which can be imitated by the host country. Although one may argue that there exist Intellectual Property Rights (IPRs) governing transfer and protecting of technologies through patents and trademarks, however, developing countries seldom have the machinery and the funds to uphold such protection as guaranteed by the various IPR laws, act and…...

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