What is a multinational corporation (MNC)? State any one reason why MNCs prefer to set up production in developing countries like India.
Generated by claude-sonnet-4-6 · 2026-06-26 13:24 · grounding rag
Model Answer
A Multinational Corporation (MNC) is a company that owns or controls production in more than one nation.
One reason MNCs prefer to set up production in developing countries like India: These countries offer cheap labour and other resources, which lowers the cost of production and allows MNCs to earn greater profits.
Source: Globalisation and the Indian Economy, Chapter 4
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Explanation
- The definition of MNC is a direct quote from the textbook — write it exactly.
- For the reason, the examiner expects you to link cheap labour/resources → lower production cost → higher profits. All three elements together fetch full marks; mentioning only "cheap labour" without connecting it to profit may cost half a mark.
- Do not list multiple reasons — the question asks for one. Stick to the most central reason from the passage.