A multinational business is not one which sells in more than one country. To become multinational a business must also produce in more than one country. Why do firms become multinational?
To produce goods in countries with low costs, such as low wages
To extract raw materials which the firm may need for production or refining
To produce goods close to the market to reduce transportation costs
To avoid barriers to trade
To expand into different market areas to spread risks
To remain competitive.
Jobs are created, which reduces unemployment
Output of goods and services increases in the country
Some goods will be sold abroad, which will increase the exports of the country
Imports may be reduced
Taxes are paid by the multinationals
More product choice for consumers and more competition.
Jobs created are often unskilled
Local firms may be forced out of business
Repatriation of profits
Multinationals often use up scarce and non-renewable primary resources
Multinationals may threaten to leave the country and create big job losses if the governments does not offer large grants to them.