Vol. 1, Issue 4, Part D (2015)

Abstract
In today’s global economy MNCs are playing an important role especially in emerging markets. But what are MNCs? Multinational corporations are those large firms which are incorporated in one country but which own, control or manage production and distribution facilities in several countries. Therefore, these multinational corporations are also known as transnational corporations.rnThey transact business in a large number of countries and often operate in diversified business activities. Multinational companies (MNCs) play an important role in linking rich and poor economies and in transferring capital, knowledge, ideas and value systems across borders of different countries. Their interaction with institutions, organizations and individuals generates both positive and negative spillovers for various groups of stakeholders in both the home and host countries. rnA good understanding of the role of MNCs in emerging economies is vital both for policymakers and for MNCs themselves. Policymakers are today influencing the regulatory regime under which both MNCs and local business partners operate. They are interested in understanding how foreign direct investment (FDI) influences economic development and national welfare. This is critically important for emerging markets as the sole purpose of their policy framework is to achieve increased levels of economic development for their country. rnThe expectation that FDI will benefit the local economy has motivated many governments to offer attractive incentive packages to entice investors. The rationale is that the social benefits of inward FDI would exceed the private benefits of FDI, and investors would take into account only the latter when deciding over investment locations. rnDespite the policy relevance, the impact of MNCs on host economies is not well understood. Some FDI is good, almost certainly some is harmful. It is difficult to assess which FDI falls into which category. Thus, the interest in analyzing the role and impact of MNCs.