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List any two reasons for the incompatibility of multinational companies to the least developed economy like Nepal.

List any two reasons for the incompatibility of multinational companies to the least developed economy like Nepal.

Solution

A least developed economy like Nepal often cannot fully benefit from MNCs. Two reasons for this incompatibility are:

  1. Effect on local industries and market: local Nepalese industries cannot compete with large-scale, technologically advanced MNCs, and are pushed out of the market.
  2. Outflow of capital: MNCs send their profits back to parent countries while paying minimal local wages, lowering the host country's foreign currency levels.

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