Explain the three conditions that determine MNCs setting up production in other countries.

1. MNC’s set up production in countries where there is ample of availability of skilled and unskilled labour at a low cost. In order to get a hold of the market as well as for profit, they generally look for investment options in developing countries like India.

2. The laws of a country relating to setting up of production and proximity of the market are also crucial factors in determining the set up of production.

3. MNC’s also require trained personnel and professionals in particular fields. For example- the increasing set up of many call centers and BPO’s (Business Process Outsourcing) has led to a significant rise in demand for people having good communication skills.

NOTE – Multinational Corporations (MNCs) are large companies functioning and carrying out trade in different parts of the world. They usually look for countries where laws in relation to foreign investment are flexible and trade practices suitable to their needs of production.