Negative effects of internet essay

When MNEs make investments in foreign countries their main objective is to maximize their profit. Some advantageous characteristics of these countries, such as cheap labour force, natural resource abundance or high quality expertise, allow MNEs to enhance their economic performance. MNEs regularly repatriate their profits from investment to the account of their parent companies in the form of dividends or royalties transferred to shareholders as well as the simple transfer of accrued profits. It also helps them avoid larger taxes by using transfer prices. However, this profit repatriation results in huge capital outflows from the host country to the home country and negatively affects the balance of payment of the former. Thus the host countries often set limits on the amount of profits that MNEs can repatriate in order not to have balance of payment deficits or reduced foreign exchange reserves. Such policy can induce these MNEs to invest profits in different projects within the host country (Billet, 1991).

Negative effects of internet essay

negative effects of internet essay

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