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By setting up their production plants in India, MNCs such as Ford Motors tap the
advantage not only of the large markets that countries such as India provide, but
also the lower costs of production. Explain the statement.
Why do you think would the company want to develop India as a base for
manufacturing car components for its global operations? Discuss the following
factors:
(a) cost of labour and other resources in India
(b) the presence of several local manufacturers who supply auto parts to Ford
Motors
(c) closeness to a large number of buyers in India and China
In what ways will the production of cars by Ford Motors in India lead to
interlinking of production?
In what ways is an MNC different from other companies?
Nearly all major multinationals are American, Japanese or European, such as
Nike, Coca-Cola, Pepsi, Honda, Nokia. Can you guess why?

MNCs and Globalisation

In the past three or four decades, more and more MNCs have been looking for
locations around the world which would make production cheaper for them. Foreign
investment by MNCs in these countries has been rising. At the same time, foreign
trade between countries has been rising rapidly. A large part of foreign trade is
also controlled by MNCs. For instance, the car manufacturing plant of Ford Motors in
India not only produces cars for the Indian markets, it also exports cars to other
developing countries and exports car components for its many factories around
the world. Likewise, activities of most MNCs involve substantial trade in goods
and services.

What was the main channel for connecting the countries in the past?
How is it different now?

Distinguish between foreign trade and foreign investment.

In recent years, China has been importing steel from India. Explain
how the import of steel by China will affect:

(a) steel companies in China.

(b) steel companies in India.

How will the import of steel from India into the Chinese markets lead to
integration of markets for steel in the two countries?

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