IELTS essay question of 7th Jan 2012, Australia

Some developing countries invite large foreign companies to open offices and factories in order to help their economy. However, others feel that foreign companies should be shut out and instead the government should help the local companies to contribute to the economic growth. To what extent do you agree or disagree?

It is a highly debatable issue whether multinational companies (MNCs) should be encouraged by the governments of developing countries or whether the local companies should be promoted. I firmly believe that MNCs are good for the economic growth. A number of arguments surround my opinion.

There are many advantages of MNCs. To begin with they provide employment that usually pays better than other available opportunities. What is more, they train local labor with more sophisticated techniques which in the long run bring benefits to the host country.  They also raise the growth rate of host nation by introducing new investment and new technology. To add to it, they promote efficient production and bring a broader range of products to the widest possible market.

Furthermore, such MNCs promote improvement or development of various supporting industries or complementary industries. For example, if an MNC opens in a place, then many businesses open in the neighbourhood, which cater to the workers working in these MNCs. In this way, they stabilize and stimulate local economies, and raise standards of living.

Another important advantage of MNCs is that they induce their local rivals to become more innovative and competitive.  For instance, it is a well known fact that Indian company Videocon has improved its standard to compete with MNCs such as Samsung and Sony. Finally, these companies promote positive values, such as diversity, and equality for women. They also create an environment of nonviolence and international cooperation.

To put it in a nutshell, I pen down saying that MNCs may have their negative points, but their pros far outweigh their cons. So, they should be promoted by the governments of developing countries.