Multi-spillover Effects of Multinational Corporations on Host Countries

Abstract

The debate on the mushrooming growth of MNCs (multinational corporations) across the globe is drawing the attention of researchers as well as policy makers worldwide. This debate concerns the self-seeking motives of the entry of these MNCs in the host nations. Arguments differ on whether the MNCs operate in the new nations for their own motives only, thereby ignoring the interest of the host countries and their domestic firms. Several studies conducted in the past have attempted to measure the effects of the entry of the MNCs in the host nations. Unlike the direct effects, the indirect effects of these multinationals are quite difficult to enunciate due to the imprecise and disparate nature of the definition of these spillovers. The present paper contributes to this research by investigating the findings of past empirical researches carried out on spillover effects generated by these MNCs in the host nations. The study concludes that existence of both positive as well as negative spillovers is not the sole outcome of an ‘MNC entry’ into a host nation as posed by its critics but an array of other factors, thereby calling for a wider research to explore these factors.