may also prevent the natural emergence or expansion of domestic suppliers. Profits that would otherwise have been given to local entrepreneurs, and probably been reinvested locally, are instead reallocated abroad. The host country becomes more dependent on multinational companies for employment and output. With the high profits, which multinational corporations and their subsidiaries have, a generation of large amounts of tax revenue for host governments is created. However, MNCs can use transfer pricing to switch their profits to countries with very low rates of corporation tax. Furthermore, they usually receive generous tax concessions and allowances from host governments and, in many cases, the corporation tax paid by the foreign firm is actually outweighed by the subsidies and grants it receives from the government. By displacing local competitors, MNCs further reduce the host government's revenues. Multinational companies bring with them a slue of specific factors such as: managerial skills, business knowledge and technological information, which benefit to host countries a great deal. Different economic theories stresses the importance of technological advancement for economic development. However, for advancement of technology to occur with ought the help of other countries would require large amounts of research and development on the part of indigenous companies. It is much cheaper and easier to allow MNCs to "transfer" their technology by establishing subsidiaries, employing and training local people and forming linkages with the domestic economy(Spill Over effect). Can host countries rely on MNC’s for their technological advancement?, multinational companies are naturally reluctant to share their knowledge. They have, as one individual said, "no commercial interest in diffusing [their] knowledge to potential native competitors"(Site 5). The multinational company's technical knowledge is often of little (external...
