Which statement describes a disadvantage of transnational corporations (TNCs)?

Which statement describes a disadvantage of transnational corporations (TNCs)?

• A. Profits may leave the country and return to the country of origin.
• B. They always create jobs locally.
• C. They have no environmental impact.
• D. They always pay higher taxes.

Answer: (A)

Profits repatriation is a key disadvantage of transnational corporations. When a multinational operates in a developing country, much of the earnings they make there can be sent back to the parent country. This moves money out of the host economy, reducing the funds available for local reinvestment and potentially lowering domestic tax revenue, which can limit long-term development. While TNCs can bring investment and jobs, the real benefit depends on how much profit stays and cycles within the host country. The other statements are not reliable indicators: TNCs don’t always create lasting local jobs, they can have environmental impacts, and taxes paid aren’t guaranteed to be higher.

Profits repatriation is a key disadvantage of transnational corporations. When a multinational operates in a developing country, much of the earnings they make there can be sent back to the parent country. This moves money out of the host economy, reducing the funds available for local reinvestment and potentially lowering domestic tax revenue, which can limit long-term development. While TNCs can bring investment and jobs, the real benefit depends on how much profit stays and cycles within the host country. The other statements are not reliable indicators: TNCs don’t always create lasting local jobs, they can have environmental impacts, and taxes paid aren’t guaranteed to be higher.