any mining, petroleum, banking and telecommunication companies like MTN, Vodafone, and Zain to mention but a few. This has accounted for an increase in the domestic incomes and expenditure and hence the stimulus in domestic business as lots of jobs had been created. The workers also gain from the technology imported by the MNCs (technology transfer). Revenuesis also a plus in the operations of the MNCs for the domestic economy. MNCs and domestic producers are required to pay taxes and therefore contribute to the public finances. Giving the highly profitable nature of many MNCs, the level of tax revenue raised from this source is mostly significant. The host country s balance of payment position is also likely to improve on a number of counts as a result of MNC investment. Firstly, the investment will represent a direct flow of capital into the country and secondly, in the long term, the MNC investment is likely to result in both import substitution and export promotion, for, goods previously purchased as imports could now be produced locally. Despite the gains, multinational investment may not always be beneficial either in the short or long term with particular reference to the developing world. It is possible that jobs created in one region of a host country by a new MNC with its superior technology and working practices may cause businesses to fold else where and thus increase in the level of unemployment in those region. Profits repatriation which constitutes capital flight might effectively undermine many or all of the potential gains from multinational investment. In addition to these concerns, there are also the following problems [2]. Is much uncertainties associated with the operations of MNC. They are highly dynamic and therefore can simply close down their businesses in the foreign countries and move. This is especially likely with older plants which would need upgrading if the MNC were to remain or with plants that can be easily sold without much loss. If a country has a large foreign multinational sector within the economy, it will become very vulnerable and face great uncertainty in the long term. It may thus be force to offer the multinational perks in the form of grants, special tax relief and other concessions in order to persuade them to remain all of which are costly to the tax payers in the developing countries.fact that MNC can shift production locations not only gives them production advantages or economic flexibility, but it enables them to exert control over their host nations. This is particularly the case in many of the developing nations where MNCs are not only major employers but in many cases the principal wealth creators. Thus attempts by the host state, for example to improve workers safety and welfare or impose pollution controls may go against the interest of the MNCs. MNC might thus oppose such measures or even threaten to withdraw from the country if such measures are not modified or dropped, rendering those developing economies vulnerable to serious economic fluctuations and shocks.pricingdomestic producers, MNCs are always finding ways to reduce their tax liabilities. One unique way that an MNC can do this is through the process know as transfer pricing. This enables the MNC to reduce its profits in countries with high rate of profit tax, and increase them in countries with low rates of profit tax. This can be achieved by simply manipulating its internal pricing structure. For e...
