Question

Which of the following statement is incorrect?
$\left(1\right)$ MNCs have less impact on the development process of the under developed countries.
$\left(2\right)$ Some MNCs may be 'footloose' i.e., to say - they might locate in a country to gain the tax or grant advantages but then move away when these run out.
Select the correct answer from the options given.

• A. $\left(2\right)$ only
• B. $\left(1\right)$ only
• C. Both $\left(1\right)$ & $\left(2\right)$
• D. Neither $\left(1\right)$ nor $\left(2\right)$

Answer 1

The correct option is B $\left(1\right)$ only

Multinationals provide an inflow of capital into the developing country. 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.